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Quippo Construction Equipment Limited v. Janardan Nirman Pvt. Ltd: Right to object Venue in Domestic Arbitration
Quippo Construction Equipment Limited v. Janardan Nirman Pvt. Ltd: Right to object Venue in Domestic Arbitration
Introduction
On 29th April 2020, in the case Quippo Construction Equipment Limited v. Janardan Nirman Pvt. Ltd[1], the apex court has ruled that a party cannot challenge or question the venue of the arbitration and contend the jurisdiction of the Tribunal at a later stage if it failed to object to the proceedings being so conducted. It will be deemed to possess waived all such objections. Within the judgment, Court went into detail on the role and importance of Section 4, 16 and 20 of the Arbitration & Conciliation Act, 1996 ("the Act")[2], and held that an Arbitral Tribunal might be a creature of a contract and a party although features a right to object, however, if the party doesn't exercise said right it's deemed to be waived.
Facts
Janardan Nirman Pvt Limited, the respondent, is a company occupied with the business of infrastructure improvement activities. The Appellant Quippo Construction Equipment Ltd, a company, settled with giving hardware to infrastructure activities. The parties went into four separate agreements for the availability of construction hardware. Under three of those, the parties designated New Delhi as the setting for arbitration, to be administered by the Construction Industry Arbitration Association (CIAA). Within the remainder of the arrangement, they consented to Kolkata as the setting for arbitration, to be administered by the Construction Industry Arbitration Council (CIAC)[3]. When the dispute arose, CIAA assigned a sole arbitrator to direct proceedings in New Delhi. The respondent was enough told and informed about the same. Preventing the existence from getting any understanding between the parties, the respondent recorded a suit within the Sealdah Court seeking an order against the appealing party from continuing with the arbitration. While the Sealdah Court initially passed an invitation restraining the arbitration proceedings, the difficulty alluded to arbitration after the litigant documented an application under Section 8 of the Arbitration Act. Despite sufficient notification and opportunities given on the resumption of arbitral proceedings, the respondent neglected to point out and present its case before the arbitrator. In the end, the arbitrator passed an ex-parte grant tolerating the appealing party's claims within the entirety of the agreements.
Issue Before the Supreme Court
The main issue that arose before the Supreme Court was 'whether insight of Section 4 of the Act[4], the Respondent had waived its right to challenge the jurisdiction through its conduct during the arbitral proceedings.
Conclusion
The conclusions drawn from this judgement are that a party waives its right to object by conduct under Section 4 of the Act if they do not raise their objections during the arbitration proceedings. The Arbitrator has jurisdiction under Section 16 of the Act[5] to act and rule on its jurisdiction. And the exclusive jurisdiction lies with the Court during which jurisdiction the Award has been passed. In domestic arbitration, the importance of arbitration is different from international arbitration, as a place of arbitration appearing in Section 20[6] is disparaging in domestic arbitrations as substantive also as curial law would be identical. However, just in the case of international arbitration, substantive and curial law assumes special significance. Thus, we can interpret that just in the case of international arbitration, "place of arbitration" is not disparaging.
This is a step towards minimalising the intervention of the Court in arbitral proceedings. By this judgment, the Apex Court has made it clear that objections like jurisdictional objections and objections on the seat & venue or concerning the validity of the arbitration agreement need to be raised before the Tribunal at a good time. If a party fails to do so, it might have waived its right to form such objections in the future. The Court also highlighted that the importance of seats doesn't have that much significance in domestic arbitrations compared to international commercial arbitrations where tons revolve around it.
[1] Civil Appeal No.2378 of 2020
[2] https://legislative.gov.in/sites/default/files/A1996-26.pdf
[3] http://www.ciac.in/
[4] https://indiankanoon.org/doc/354344/
[5] https://indiankanoon.org/doc/675839/
[6] https://ibclaw.in/section-20-place-of-arbitration/
(This Article Does Not Intend To Hurt The Sentiments Of Any Individual Community, Sect, or Religion, Etcetera. This Article Is Based Purely On The Authors Personal Views And Opinions In The Exercise Of The Fundamental Right Guaranteed Under Article 19(1)(A) And Other Related Laws Being Force In India, For The Time Being. Further, despite all efforts made to ensure the accuracy and correctness of the information published, White Code VIA Mediation and Arbitration Centre Foundation shall not be responsible for any errors caused due to human error or otherwise.)
- The main issue that arose before the Supreme Court was 'whether insight of Section 4 of the Act, the Respondent had waived its right to challenge the jurisdiction through its conduct during the arb
- A party waives its right to object by conduct under Section 4 of the Act if they do not raise their objections during the arbitration proceedings.
- we can interpret that just in the case of international arbitration
