Conducting Multiple Arbitrations before Different Arbitral Tribunals for Same Contract is Counterproductive: Delhi High Court

Conducting Multiple Arbitrations before Different Arbitral Tribunals for Same Contract is Counterproductive: Delhi High Court

Delhi High Court has ruled that engaging in multiple arbitrations before different Arbitral Tribunals for the same contract is counterproductive and should be avoided. The bench emphasized the importance of parties disclosing such information to the Court when seeking the appointment of an arbitrator under Section 11(6) of the Arbitration & Conciliation Act, 1996.

On January 31, 2014, Bharat Sanchar Nigam Limited (BSNL) floated a tender, leading to the award of the tender to the petitioner via an advance purchase order. The petitioner's responsibilities included setting up an advanced electronic infrastructure network for communication within the Indian Navy, which entailed supplying equipment, conducting testing, managing delivery and installation, overseeing commissioning, and constructing civil infrastructure at the designated site.

According to the petitioner, all equipment under the purchase order was supplied by October 2019. However, the delays on the part of BSNL prevented the project from being completed on time.

Subsequently, the petitioner claims that, as a result of delays by BSNL, they faced additional expenses in providing a three-year warranty from the date of actual commissioning. In a letter dated March 13, 2023, the petitioner requested payment of approximately 230 crores to cover the additional costs incurred. Following this, the petitioner approached the Delhi High Court and filed a petition under Section 11(6) of the Arbitration Act, seeking the appointment of a sole arbitrator as per Clause 22 of the Purchase Order.

The petitioner argued that there was ongoing arbitration concerning the same purchase order, which was currently pending before a sole arbitrator.

The Court acknowledged the existence of an ongoing arbitration related to the same purchase order before the sole arbitrator appointed by the Court's order dated January 23, 2024. Citing the decision in Gammon India Ltd. & Anr. v. NHAI , the Court emphasized that parties should disclose if any tribunal has already been constituted for adjudicating claims arising from the same contract or series of contracts. In such cases, an effort should be made to refer the matter to the same tribunal or a single tribunal to avoid conflicting and irreconcilable findings.