Case Note & Summary
The case arose from a charter party executed on 6 November 2006 between Rashtriya Chemical Fertilizers Ltd., a public sector undertaking, and J.S. Ocean Liner Pte. Ltd., a Singapore-based company. The charter party contained an arbitration clause (Clause 43) stipulating that all disputes would be settled in India under the Arbitration and Conciliation Act, 1996, and the Maritime Arbitration Rules of the Indian Council of Arbitration. On 6 December 2007, respondent No.1 invoked arbitration, and an arbitral tribunal of three members was constituted. The claimant filed a claim for unpaid freight amounting to US$ 293,588.78, and the petitioners filed a counter-claim. On 12 December 2009, the arbitral tribunal drew the parties' attention to Rule 20(1) of the Maritime Arbitration Rules, which provided a maximum limit of two years for making the award, extendable by agreement or by the Maritime Arbitration Committee. While respondent No.1 agreed to extend the time until 31 December 2010, the petitioners insisted that the tribunal had become functus officio and moved an application for termination, which was rejected on 19 December 2009. The petitioners then filed a writ petition under Article 226 of the Constitution of India seeking a mandamus declaring the arbitral proceedings terminated and quashing the tribunal's order. The respondent opposed the petition, arguing that Section 21 of the Act deals only with limitation, not termination, that the parties can extend the time, and that the petitioners had caused delays through numerous interim applications. The High Court examined the contentions and held that a writ of mandamus could not be granted. It observed that Rule 20 cannot be read in isolation and must be considered along with the overall procedure. The Court emphasized that a party which causes delay cannot plead the outer time limit to seek termination, and that the legislative scheme permits extension of time. Accordingly, the petition was dismissed, affirming the tribunal's jurisdiction to continue the proceedings.
Headnote
A) Arbitration - Termination of Mandate - Time Limit for Award - Arbitration and Conciliation Act, 1996, Section 21; Indian Council of Arbitration Maritime Arbitration Rules, Rule 20(1) - The High Court considered whether the arbitral proceedings had terminated because the two-year period from commencement had expired without an award. The Court held that Rule 20(1), which prescribes a maximum limit of two years for making the award, cannot be read in isolation; the overall procedure under the Rules must be considered. The legislative intention allows parties the freedom to extend the period of adjudication, either by agreement or by the Maritime Arbitration Committee. Consequently, a party that caused delays through numerous interim applications cannot plead the outer limit to demand termination of the arbitral proceedings. The Court ruled that a writ of mandamus in the nature of a declaration cannot be granted, and the Arbitral Tribunal's decision rejecting the termination application was justified. (Paras 7-9)
Issue of Consideration
Whether the arbitral proceedings before the Arbitral Tribunal stood terminated due to lapse of the two-year time limit under Rule 20(1) of the ICA Maritime Arbitration Rules; whether the writ petition under Article 226 of the Constitution is maintainable to challenge the Arbitral Tribunal's decision on extension of time.
Final Decision
The High Court held that the writ of mandamus cannot be granted. It ruled that the two-year time limit under Rule 20(1) of the ICA Maritime Arbitration Rules is not absolute and can be extended by agreement or by the Maritime Arbitration Committee. A party which causes delay through numerous applications cannot plead the outer limit to demand termination of the proceedings. The petition was dismissed, and the Arbitral Tribunal's rejection of the termination application was upheld.
Law Points
- writ of mandamus cannot be granted to terminate arbitral proceedings
- Rule 20 time limit not absolute
- party causing delay cannot insist on termination
- freedom to extend period of adjudication
Case Details
2010 LawText (BOM) (04) 106
Writ Petition No. 184 of 2010
J.N. Patel, A.P. Bhangale
Dr. Milind Sathe, Shri Ashish Kamat for M/s. M.P. Savla & Co. (Petitioners); Shri S.U. Kamdar, Ms Pooja Patil, Shri Ashwin Shankar (Respondent No.1)
Rashtriya Chemical Fertilizers Ltd. and Mr. K.C. Prakash
J.S. Ocean Liner Pte. Ltd., Indian Council of Arbitration, Mr. Jagdish C. Seth, Captain V.K. Gupta, Mr. G.J. Kodwaney
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India seeking a mandamus declaring that arbitral proceedings had terminated and the arbitral tribunal lost jurisdiction.
Remedy Sought
Petitioners sought a writ of mandamus declaring that the arbitral proceedings stood terminated and the Arbitral Tribunal ceased to have jurisdiction, and to quash the order dated 24-12-2009, the minutes of meeting dated 19-12-2009, and the email dated 18-12-2009.
Filing Reason
Petitioners believed that the two-year time limit under Rule 20(1) of the ICA Maritime Arbitration Rules had expired without an award being made, rendering the Arbitral Tribunal functus officio.
Previous Decisions
The Arbitral Tribunal rejected the petitioners' application for termination on 19-12-2009, holding that the proceedings had not terminated.
Issues
Whether the arbitral proceedings before the Arbitral Tribunal stood terminated due to lapse of the two-year time limit under Rule 20(1) of the ICA Maritime Arbitration Rules.
Whether the writ petition under Article 226 is maintainable to challenge the Arbitral Tribunal's decision on extension of time and termination of proceedings.
Submissions/Arguments
Petitioners argued that under Section 21 of the Arbitration and Conciliation Act, 1996, the arbitral proceedings commenced on 6-12-2007 when the respondent received the request for arbitration, and since the award was not made within two years, the Tribunal became functus officio and must terminate the proceedings.
Respondent No.1 contended that Section 21 deals only with limitation, not termination; Rule 20 allows extension of time by agreement or by the Maritime Arbitration Committee; the petitioners caused delays through numerous interim applications and now seek to benefit from their own delay; and the writ petition is not maintainable under Section 5 of the Act, which limits judicial intervention.
Respondent No.1 also submitted that the petitioners had a counter-claim pending and thus could not seek termination, and that alternative remedies were available under the Act.
Ratio Decidendi
The time limit for making an arbitral award under Rule 20(1) of the ICA Maritime Arbitration Rules is not absolute or sacrosanct; it is subject to extension by agreement of the parties or by the Maritime Arbitration Committee. A party that has contributed to the delay in the proceedings through its own conduct cannot rely on that time limit to seek termination of the mandate of the Arbitral Tribunal. The legislative intention under the Arbitration and Conciliation Act, 1996, and the Rules is to allow parties the freedom to extend the period of adjudication.
Judgment Excerpts
By this writ petition under Article 226 of the Constitution of India, the petitioners are praying for issuance of a writ of mandamus in the nature of an order or direction, ordering and/or declaring that the arbitral proceedings between the petitioners and respondent No.1 stands terminated and the Arbitral Tribunal ... has ceased to have jurisdiction ...
Rule 20 cannot, in our opinion, be read in isolation. The overall procedure laid down under the Rules has to be considered. When a party to the proceeding, by making numerous applications at interim stage, cause delay in the conduct of the proceedings before the Arbitral Tribunal, such party cannot plead outer limit fixed under Rule 20 to argue that the Arbitral Tribunal should conclude the hearing within two years.
This, in our opinion, is not a hard and fast rule, particularly when the legislative intention is clear to allow the parties the freedom to extend the period of adjudication.
Procedural History
A charter party was executed on 6-11-2006. Respondent No.1 invoked arbitration on 6-12-2007. The Arbitral Tribunal was constituted with nominees from both sides. Respondent No.1 filed its statement of claim on or about 2-4-2008; petitioners filed written statement and counter-claim on 30-6-2008. On 12-12-2009, the Tribunal drew attention to Rule 20(1) of the Maritime Arbitration Rules. Petitioners called for termination on 17-12-2009; respondent No.1 agreed to extend time. The Secretary of ICA contended by email that time count commenced from 2-4-2008. Petitioners applied for termination on 19-12-2009; the Tribunal rejected the application, communicating the order on 28-12-2009. The writ petition was filed in 2010.
Acts & Sections
- Arbitration and Conciliation Act, 1996: Section 5, Section 21
- Constitution of India: Article 226
- Indian Council of Arbitration Maritime Arbitration Rules: Rule 20(1)
