Case Note & Summary
The petitioner, NAS Aviation Services India Pvt. Ltd., filed an Arbitration Application under Section 11 of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator and an Arbitration Petition under Section 9 of the Act for interim reliefs, both arising from a cargo handling contract with the respondent, Kingfisher Airlines Limited. The contract was entered into on 22 June 2009. The petitioner claimed that the respondent owed dues of around Rs.9 crores, of which only Rs.60 lakhs was received, and sought to invoke arbitration based on certain correspondence. The respondent raised a preliminary objection that there was no arbitration agreement between the parties. The court examined the contract and the correspondence relied upon by the petitioner. The contract did not contain any arbitration clause. The letters exchanged between the parties, including a letter dated 23 September 2009 from the petitioner calling upon the respondent to pay dues, did not contain any reference to arbitration or an agreement to refer disputes to arbitration. The court held that for an arbitration agreement to exist, it must be in writing and contain a clear intention to refer disputes to arbitration. The mere mention of arbitration in subsequent correspondence, without acceptance by the other party, does not constitute an arbitration agreement. The court concluded that there was no arbitration agreement between the parties, and therefore, the Arbitration Application under Section 11 and the Arbitration Petition under Section 9 were not maintainable. Both were dismissed with no order as to costs.
Headnote
A) Arbitration Law - Existence of Arbitration Agreement - Section 7, Arbitration and Conciliation Act, 1996 - The court considered whether a cargo handling contract and subsequent correspondence contained an arbitration agreement. The contract did not contain an arbitration clause, and the letters relied upon by the petitioner did not evidence an agreement to arbitrate. Held that no arbitration agreement exists between the parties (Paras 3-10).
Issue of Consideration
Whether there exists an arbitration agreement between the parties to refer the disputes to arbitration.
Final Decision
Both the Arbitration Application and the Arbitration Petition are dismissed. No order as to costs.
Law Points
- Arbitration agreement must be in writing
- existence of arbitration agreement is a jurisdictional prerequisite
- Section 7 of the Arbitration and Conciliation Act
- 1996
- Section 11 of the Arbitration and Conciliation Act
- Section 9 of the Arbitration and Conciliation Act
