Interpretation Of A Clause As Arbitration Clause Depends Upon Whether There Was Consensus Ad Idem Between Parties On Resolution Of Disputes By Arbitration: Delhi HC

The Court said that if the Court reaches such a finding, even on a prima facie basis, a reference to arbitration would be justified.

The Court hearing an Arbitration Petition under Section 11 of the Arbitration and Conciliation Act, 1996 seeking appointment of an arbitrator for adjudication of disputes between the parties under a Dealership Agreement.

The bench of Justice Prateek Jalan observed, “The question of whether a clause is to be construed as an arbitration clause is, like all contractual provisions, ultimately dependent upon the intention of the parties, i.e., whether there was a consensus ad idem between them with regard to resolution of disputes by arbitration. If the Court reaches such a finding, even on a prima facie basis, a reference to arbitration would be justified.”

Advocate Sachin S. Pujari appeared for the Appellant and Advocate Jyoti Kumar Choudhary appeared for the respondent.

In the present case, the controversy between the parties relates to the existence of an arbitration agreement, which would govern the resolution of disputes between them.

The Court said that the task of the referral Court is limited to a prima facie determination with regard to the existence of the arbitration agreement.

The Court mentioned the decision of the Supreme Court in SBI General Insurance Co. Ltd. v. Krish Spinning where the SC delineated the scope of adjudication under Section 11 and held that all questions of arbitrability, including the final determination of the existence of the arbitration agreement, are best left to the arbitral tribunal, consistent with the principle of kompetenz-kompetenz.

The Court further referred to the decision of the Supreme Court in Visa International Ltd. v. Continental Resources (USA) Ltd. and Powertech World Wide Ltd. v. Delvin International General Trading LLC which according to the Court make it clear that the intention of the parties can be gleaned from the correspondence and attendant circumstances, read conjointly.

The Court said it is not necessary for the Court to examine whether, in any event, an arbitration agreement was concluded by exchange of correspondence, de hors the contract, in terms of Section 7(4)(b) of the Act.

Accordingly, the Court allowed the Petition.

Cause Title: M/s Dhanalaxmi Sales Corporation v. Boston Scientific India Pvt. Ltd. (Neutral Citation 2024:DHC:6370)

Appearance:

Appellant: Adv. Sachin S. Pujari

Respondent: Adv. Jyoti Kumar Chaudhary, Adv. Sonali Khanna and Adv. Vanshika Gupta