Case Note & Summary
The applicant, Reshamsingh and Co. Pvt. Ltd., entered into a charter party agreement with the respondent, Dharti Dredging and Infrastructure Ltd., on 26 May 2008, under which the applicant provided a tug for towing the respondent's dredgers and barges at Vizag Port. Disputes arose, and the applicant issued a notice on 22 November 2008 and invoked arbitration on 5 May 2009. The applicant filed an arbitration application under the Arbitration and Conciliation Act, 1996, seeking reference of disputes to arbitration based on a clause in the charter party that read: 'All disputes subject to Mumbai Jurisdiction under Arbitration.' The respondent opposed the application, contending that the clause did not constitute a valid arbitration agreement but merely indicated that disputes were subject to Mumbai jurisdiction. The court examined the clause and found that it lacked the essential elements of an arbitration agreement. The court noted that under Section 7 of the Act, an arbitration agreement must be in writing and must show an intention to submit disputes to arbitration. The court relied on the Supreme Court's decision in Jagdish Chander v. Ramesh Chander, which held that the language must disclose a determination to refer disputes to a private tribunal and a willingness to be bound by its decision. The court observed that the clause only mentioned 'under Arbitration' without specifying any mechanism for arbitration, such as appointment of arbitrators or procedure. The court concluded that the clause was merely a jurisdiction clause conferring exclusive jurisdiction on Mumbai courts, and the use of the word 'arbitration' was incidental. Accordingly, the court dismissed the arbitration application, holding that there was no valid arbitration agreement between the parties.
Headnote
A) Arbitration Law - Validity of Arbitration Clause - Section 7 Arbitration and Conciliation Act, 1996 - Interpretation of Arbitration Agreement - The clause 'All disputes subject to Mumbai Jurisdiction under Arbitration' was held not to constitute a valid arbitration agreement as it lacked clear intention to refer disputes to arbitration and only indicated jurisdiction. The court held that the mere use of the word 'arbitration' does not create an arbitration agreement; the language must disclose a determination to refer disputes to a private tribunal. (Paras 3-8) B) Arbitration Law - Intention of Parties - Section 7 Arbitration and Conciliation Act, 1996 - Requirement of Clear Intention - The court relied on Jagdish Chander v. Ramesh Chander to hold that the terms of the agreement must indicate an intention to refer disputes to a private tribunal and a willingness to be bound by its decision. The clause in question did not show such intention. (Paras 6-8)
Issue of Consideration
Whether the clause 'All disputes subject to Mumbai Jurisdiction under Arbitration' in a charter party agreement constitutes a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996.
Final Decision
The Arbitration Application is dismissed. The clause 'All disputes subject to Mumbai Jurisdiction under Arbitration' does not constitute a valid arbitration agreement under Section 7 of the Arbitration and Conciliation Act, 1996. No order as to costs.
Law Points
- Arbitration agreement must show clear intention to refer disputes to arbitration
- mere use of word 'arbitration' insufficient
- Section 7 Arbitration and Conciliation Act 1996
- no particular form required but language must disclose determination to refer disputes to private tribunal
