Nederland B.V. Vs. M/S. Larsen & Toubro Ltd  Insc 674 (29 November 2005)
O R D E R This is an application under Section 11 of the Arbitration and Conciliation
Act, 1996 praying for appointment of a sole arbitrator. The application has
been placed before me as a nominee of the learned Chief Justice of India for
necessary orders. The petitioner is a company incorporated under the laws of
the Netherlands while the respondent is an Indian company. The parties had
entered into an agreement regarding certain works to be executed by the
petitioner. Disputes appeared to have arisen between the parties. The agreement
between the parties admittedly contains an arbitration clause which runs as
"23. Arbitration Any dispute or claim arising out of or relating to the
Agreement its breach or interpretation thereof, shall be determined by
reference to a sole Arbitrator to be in accordance with the Arbitration &
Conciliation Act, 1996 and the Rules framed thereunder. The venue of the
arbitration shall be at England (UK). The language to be used in the
arbitration shall be the English language. This clause shall survive the
expiration or termination of the Agreement." As per the above agreement a
sole arbitrator has to be appointed.
Parties have been unable to agree as to who should be the sole arbitrator.
This has led to the present application being filed for appointment of the
The learned counsel appearing for the petitioner drew my attention to the
fact that the petitioner company is a company incorporated in Netherlands while
the respondent Company is a Company incorporated in India. He prayed that in
view of provisions of Sections 11 (9) of the Arbitration & Conciliation
Act, an arbitrator having a neutral nationality be appointed meaning thereby
that the sole arbitrator should neither be a Dutch national nor be an Indian
national. Section 11 (9) is reproduced as under:
"11 (9) In the case of appointment of sole or third arbitrator in an
international commercial arbitration, the Chief Justice of India or the person
or institution designated by him may appoint an arbitrator of a nationality
other than the nationalities of the parties where the parties belong to
different nationalities." The key word in the above provision is 'may'
which leaves a discretion in the Chief Justice or his nominee in this behalf
and it is not mandatory that sole arbitrator should be of a nationality other
than the nationalities of the parties to the agreement.
I have the benefits of judgments of this Court on this aspect in Malaysian
Airlines Systems BHD (II) v. STIC Travels (P) Ltd. [2001 (1) SCC 509]. While dealing
with the same provision this Court has held that the use of the word 'may'
indicated that this aspect may be kept in view while appointing the sole
arbitrator but the provision is not mandatory. In this decision this Court
considered similar provisions in the laws of various countries and held that
the word 'may' in Section 11(9) of the Act is not indicated to be read as
'must' or 'shall'. The said decision was followed by this Court in Grid Corpn.
Of Orissa Ltd. v. AES Corpn. and others [2002 (7) SCC 736. In view of this
legal position it is clear that Section 11(9) of the Arbitration &
Conciliation act is not a mandatory provision.
Accordingly, I am not bound to appoint a Sole Arbitrator having neutral
nationality. I hereby appoint Mr. Justice S.N. Variava, a retired Judge of this
Court, as the sole arbitrator in this case. The address of Justice Variava is
7-B, Rockside, 116, Walkeshwar Road, Mumbai- 400 006. The remuneration of the
arbitrator and the other costs that may be involved, particularly in view of
the fact that the venue of arbitration as per the arbitration clause has to be
at England (U.K.) shall be fixed by the arbitrator.
The petition is disposed of accordingly.
A copy of this order be forwarded by the Registry of the Court to Mr.
Justice S.N. Variava forthwith.