Right to raise Objection wave of on Non-Participation in Arbitral proceedings - Synopsis
Dilpreet Singh 30 Apr 2020

On Wednesday i.e. 29th April 2020, the Supreme Court held that a party's non-participation in arbitral proceedings and failure to raise complaints before the arbitrator will prevent the party from doing so after an Arbitral Award has been issued.

A bench comprising Justice Uday Umesh Lalit & Justice Vineet Saran further pointed out that, due to the uniform applicability of substantive & curial law, the definition of a "Venue" or "Site" of arbitration may not hold much value in domestic arbitration as against international commercial arbitrations.

Factual Simulation:

Two parties have signed four deals to get rid of Arbitration Clauses. While three contracts stated that the specified "Site" will be New Delhi, one of them claimed that Kolkata is the "Location" of Arbitration.

The Construction Industry Arbitration Association's arbitration rules were to be followed, and reference to the intricacies of the proceedings in this regard was agreed.

Owing to conflicts between the parties, the appellant invoked the arbitration clause and the appellant's notice under which a single arbitrator was named and the proceedings were to be held at New Delhi.

However, the respondent challenged the validity of the Arbitration Agreement between the parties and filed a complaint before the Court of Civil Justice, attempting to declare the agreement "null and void," thereby securing a restraining order which remained before the arbitrator.

The Appellant's motion to refer the dispute to arbitration in the light of the existence of arbitration agreements between parties was eventually approved and the complaint of the Respondent was returned.

The respondent was not a party to the Abitration proceedings, and an ex-parte award was made in March 2015 in favor of the appellant, which was a common award that encompassed all agreements between the parties.

Following this, the respondent, preferred a plea before the District Court, arguing, inter alia, that one of the four contracts designated Kolkata as the place of arbitration. Eventually this appeal was rejected and challenged in the Kolkata High Court.

The Kolkata High Court gave the respondent a favourable ruling which led the other party (appellant) to come before the Supreme Court in appeal.

Supreme Court Held:

With regard to an objection posed by the respondent to the effect that a popular order was passed in all four agreements, particularly since one of the Arbitration Agreements claimed that Kolkata was the specified arbitration venue in one of the Contracts, the Supreme Court observed that since “at no stage, the aforesaid objections were raised by the respondent before the Arbitrator and the respondent let the arbitral proceedings conclude and culminate in an ex-parte award", That this would have contributed to the waiver at this point of their right to raise some of the aforementioned objections?

The Court observed that at the present point the respondent was unable to pose such an appeal, and that as it "failed to participate in the proceedings before the Arbitrator and did not raise any submission that the Arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections."

The Court also stated that the said opposition had no functional complexities as "specification of place of arbitration may be important in an International Commercial Arbitration, where the place of arbitration would decide whether curial law will apply," but not in the current domestic arbitration.

Having regard to this, the Court permitted the appeal of the appellant and held that at this point the respondent was prevented from raising an argument concerning the location or place of arbitration.

The Court concluded, "It was possible for the respondent to raise submissions that arbitration pertaining to each of the agreements be considered and dealt with separately. It was also possible for him to contend that in respect of the agreement where the venue was agreed to be at Kolkata, the arbitration proceedings be conducted accordingly. Considering the facts that the respondent failed to participate in the proceedings before the Arbitrator and did not raise any submission that the Arbitrator did not have jurisdiction or that he was exceeding the scope of his authority, the respondent must be deemed to have waived all such objections".

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