Case Note & Summary
The applicant, Futuristics Offshore Services and Chemicals Ltd., filed an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator to resolve disputes arising from a contract dated 3 July 2001 with the respondent, Oil and Natural Gas Corporation Ltd. (ONGC). The contract was for hiring, operations, maintenance, and management of vessels owned by ONGC. An arbitral tribunal was initially constituted, but during its pendency, the parties agreed to attempt resolution through an Outside Expert Committee (OEC) appointed by ONGC. The OEC submitted recommendations on 29 May 2007, with two members signing a joint recommendation and the third submitting a separate one. The applicant sought enforcement of the OEC's recommendations, but ONGC made settlement offers. Eventually, on 13 March 2010, the parties entered into a settlement agreement which recorded a full and final settlement of all claims. The applicant accepted the settlement and received payment. However, the applicant later filed the present application under Section 11(6) for appointment of an arbitrator, arguing that the settlement agreement did not cover all disputes or that it was not validly concluded. The court examined the terms of the settlement agreement and found that it expressly stated that it was in full and final settlement of all claims arising from the contract. The court held that once a settlement agreement is entered into, the underlying arbitration agreement cannot be invoked for the same disputes, as the settlement operates as accord and satisfaction. The application was dismissed as not maintainable, with the court noting that the applicant had accepted the settlement and received payment, and could not now seek to revive the arbitration.
Headnote
A) Arbitration Law - Appointment of Arbitrator - Section 11(6) Arbitration and Conciliation Act, 1996 - Maintainability after Settlement - The applicant sought appointment of an arbitrator under Section 11(6) after the parties had entered into a settlement agreement dated 13 March 2010, which recorded a full and final settlement of all claims arising from the contract. The court held that once a settlement agreement is entered into, the underlying arbitration agreement cannot be invoked for the same disputes, as the settlement operates as accord and satisfaction. The application was dismissed as not maintainable. (Paras 1-10) B) Contract Law - Accord and Satisfaction - Settlement Agreement - Effect on Arbitration - The settlement agreement dated 13 March 2010 between the parties expressly stated that it was in full and final settlement of all claims. The court held that such an agreement extinguishes the original cause of action and the arbitration clause therein, barring any further reference to arbitration. The applicant's attempt to revive the arbitration was rejected. (Paras 4-10)
Issue of Consideration
Whether an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator is maintainable after the parties have entered into a full and final settlement agreement regarding the same disputes.
Final Decision
The application under Section 11(6) of the Arbitration and Conciliation Act, 1996 is dismissed as not maintainable. The settlement agreement dated 13 March 2010 constitutes a full and final settlement of all claims, and the arbitration clause cannot be invoked thereafter.
Law Points
- Settlement agreement supersedes arbitration agreement
- Section 11(6) application not maintainable after full and final settlement
- Accord and satisfaction extinguishes underlying claims
