Case Note & Summary
The dispute arose from a bunker fuel supply agreement dated 28th February 2008 between Antikeros Shipping Corporation (appellant), a Liberian company, and Adani Enterprises Limited (respondent), an Indian company. The respondent supplied fuel to the appellant's vessel M.T. Antikeros at Mudra Port on 5th March 2008. A dispute regarding quantity and quality arose on 17th March 2008. The appellant raised a demand for damages of $1,040,400 on 3rd June 2008, which the respondent denied on 25th August 2008, also raising a counterclaim of $90,325. The agreement contained an arbitration clause providing for a three-member tribunal in Mumbai under the Arbitration and Conciliation Act, 1996. The appellant invoked arbitration on 19th March 2009 and proposed a sole arbitrator on 21st March 2009 to save costs, but received no response. On 13th May 2009, the appellant appointed Mr. R.S. Cooper as its arbitrator and called upon the respondent to appoint its arbitrator. The respondent did not respond. The appellant filed Arbitration Application No. 57 of 2011 under Section 11 of the Act on 21st February 2011. The respondent opposed the application, arguing that the arbitration clause did not survive the termination of the contract, the application was barred by limitation, and the appellant had waived its right to appoint an arbitrator. The learned Single Judge dismissed the application, holding that the arbitration clause did not survive the termination of the contract. The appellant appealed. The Division Bench allowed the appeal, holding that the arbitration clause survives termination of the contract under the doctrine of separability, the application under Section 11 is not governed by the Limitation Act, and the appellant did not waive its right to appoint an arbitrator. The court appointed a sole arbitrator to adjudicate the disputes.
Headnote
A) Arbitration Law - Survival of Arbitration Clause - Doctrine of Separability - Section 16 of the Arbitration and Conciliation Act, 1996 - The arbitration clause is an independent agreement that survives termination of the main contract. The court held that the arbitration clause in the bunker fuel supply agreement survived the termination of the contract, and the appellant's claim for damages was arbitrable. (Paras 1-10) B) Arbitration Law - Appointment of Arbitrator - Limitation for Application under Section 11 - Section 11 of the Arbitration and Conciliation Act, 1996 - The court held that the application under Section 11 is not governed by the Limitation Act, 1963, and the appellant's application was not barred by limitation as the right to apply accrued only after the respondent failed to appoint an arbitrator despite notice. (Paras 11-15) C) Arbitration Law - Waiver of Right to Appoint Arbitrator - Section 4 of the Arbitration and Conciliation Act, 1996 - The court held that the appellant did not waive its right to appoint an arbitrator by proposing a sole arbitrator or by delaying the appointment. The respondent's failure to respond to the proposal did not constitute waiver. (Paras 16-20)
Issue of Consideration
Whether the arbitration clause in the agreement dated 28th February 2008 survives the termination of the contract, and whether the appellant's application under Section 11 of the Arbitration and Conciliation Act, 1996 was barred by limitation or the appellant had waived its right to appoint an arbitrator.
Final Decision
The Division Bench allowed the appeals, set aside the order of the learned Single Judge, and appointed a sole arbitrator to adjudicate the disputes between the parties.
Law Points
- Arbitration clause survives termination of contract
- Doctrine of separability
- Appointment of arbitrator under Section 11 of Arbitration and Conciliation Act
- 1996
- International commercial arbitration
- Limitation for filing application under Section 11
- Waiver of right to appoint arbitrator
