International Fze Ltd.Dubai Vs. Vedanta Aluminium Limited, India  INSC 62
(22 January 2010)
SUPREME COURT OF INDIA CIVIL ORIGINAL JURISDICTION ARBITRATION PETITION NO. 10
OF 2009 Trimex International FZE Ltd. Dubai .... Petitioner(s) Versus Vedanta
Aluminium Ltd., India .... Respondent(s)
this petition the Petitioner-Company seeks to invoke arbitration clause under
Section 11(6) of the Arbitration & Conciliation Act, 1996 for appointment
of an arbitrator as per the Arbitration Agreement contained in clause 6 of the
Commercial Offer (purchase order) dated 15.10.2007 and clause 29 of the
Agreement exchanged between the parties on 08.11.2007.
case of the petitioner is as follows:
Petitioner-Company is registered in Dubai and engaged in the business of
trading in Minerals across the world. Based on the orders from their
purchasers, they procure mineral Ores from the suppliers, negotiate and
finalize shipments with the ship owners and arrange for the shipment of
Minerals across the world. The Respondent is a Company registered in India
using Aluminium Ore as one of the major inputs for their operations.
15.10.2007, the petitioner submitted a commercial offer through e-mail for the
supply of Bauxite to the respondent. After several exchanges of e-mails and
after agreeing on the material terms of the contract, the respondent conveyed
their acceptance of the offer through e-mail on 16.10.2007 confirming the
supply of 5 shipments of Bauxite to be supplied from Australia to
Vizag/Kakinada. On the basis of the acceptance by the respondent, the
petitioner concluded the deal with the Bauxite supplier in Australia on the
same day and entered into a binding Charter Party Agreement with the ship owner
in Oslo on 17.10.2007. A meeting was held between the representatives of the
respondent and the petitioner at Lanjigarh, Orissa on 26.10.2007 and the
minutes of this meeting were signed by them. The acceptance of the offer is
acknowledged by the respondent in these minutes. A formal contract containing a
detailed arbitration clause was also sent by the respondent to the petitioner
on 08.11.2007 which was accepted by the petitioner with some changes and
returned the same to the respondent the same evening. On 09.11.2007, the
petitioner entered into a formal Bauxite sales Agreement with Rio Tinto of
Australia for the supply of 225000 tonnes of Bauxite. On 12.11.2007, the
respondent requested the petitioner to hold the next consignment until further
notice. On 13.11.2007, the petitioner informed the respondent that it was not
possible to postpone the cargo and requested them to sign the Purchase
Agreement. On 13.11.2007 itself, the ship owners nominated the ship for loading
the material on 28.11.2007. The petitioner terminated the contract on
16.11.2007 reserving the right to claim for damages. On 18.11.2007, the
petitioner formally informed the ship owners about the cancellation of the
carriage. On 19.11.2007, the ship owners made a claim of 1 million US$ towards
commercial settlement and on 30.11.2007, the petitioner informed the respondent
to pay a sum of 1 million US$ towards compensation for loss on account of the
estimated loss for five shipments and 0.8 million towards compensation for loss
of profit and other costs and expenses for cancellation of the order. The
respondent rejected the claim of the petitioner on damages. On compensation not
being paid, the ship owners served a notice on the petitioner. After
negotiations, a settlement was arrived at between the ship owners and the
petitioner to pay a lump-sum of 600,000 US$ to be paid in two installments. The
petitioner paid the amount in two installments on 27.02.2008 and 31.03.2008. On
01.09.2008, the petitioner served a notice of claim-cum- arbitration on the
respondent to make the payment immediately otherwise treat the notice for
referring the dispute to arbitration as per Clause 29 of the Purchase Order and
informed about nominating Mr. Shiv Shankar Bhatt, a retired Judge of the
Karnataka High Court as the arbitrator from their side and requested the
respondent to nominate their own arbitrator within 30 days. On 14.11.2008, the
respondent rejected the arbitration notice stating that there was no concluded
contract between the parties. Hence, the petitioner filed the present petition
for appointment of an Arbitrator.
According to the respondent, as seen from the counter affidavit, there was no
concluded contract between the parties and the parties are still not ad idem in
respect of various essential features of the transaction.
the draft contract received from the petitioner was yet to be
accepted/confirmed by the respondent. The commercial offer provided two options
of shipment lot, namely, 2 shipments and 5 shipments. The only understanding
that had been arrived at between the parties as a result of the correspondence
subsequent to the receipt of the commercial offer from the petitioner was that
the transaction would be in respect of 5 shipments.
terms and conditions pivotal and essential to the transaction were under
negotiation as is evident from the correspondence between the parties. The
product specifications, price, inclusions in the contract price, delivery
point, insurance, commencement and conclusion dates of the contract, transfer
of title, quality check and demurrage are all factors that are at large and
remain undecided. In such a scenario, where the parties were not in one mind
with respect to any aspect of the transaction, the contention of the petitioner
that there existed a binding contract between the parties as also a binding
arbitration agreement is wholly erroneous and misleading.
from the commercial offer dated 15.10.2007, subject matter of the instant
proceedings, the petitioner had sent another commercial offer on 05.09.2007
also for 45000 MTs of Bauxite (of Australian origin) which offer had been
followed up with a purchase order executed by and between the parties.
commercial offer, subject-matter of the instant petition, was being negotiated
and the terms discussed, a shipment of Bauxite covered under the previous
commercial offer dated 05.09.2007 was received by the respondent at its plant
on or around 12.11.2007. The product was being analysed to determine its
utility value for the respondent at its plant. On account of such analysis
being conducted, the respondent on 12.11.2007 wrote to the petitioner bringing
the factum of the ongoing analysis to its notice and instructed the petitioner
to defer the new shipments till the analysis was completed and the results
obtained with respect to the utility value of the said product. Despite being
put on notice by the respondent for deferment of shipment, the petitioner permitted
the nomination of the Vessel to take place on 13.11.2007. Apart from there
being no valid and binding contract/arbitration agreement between the parties,
it is the stand of the respondent that in this petition, the petitioner seeks
to commence proceedings to fasten a liability on to the respondent for which
the respondent was not responsible in any manner whatsoever having informed the
petitioner prior to the occurrence of the event giving rise to the alleged
5) In the
light of the above pleadings of both the parties, heard Mr. K.K. Venugopal,
learned senior counsel for the petitioner and Mr. C.A. Sundaram, learned senior
counsel for the respondent.
K.K. Venugopal, learned senior counsel for the petitioner, after taking me
through the sequence of events which took place on 15.10.2007 and 16.10.2007,
submitted that the contract between the petitioner and the respondent stood
concluded by acceptance of the offer for five shipments by the respondent at
3.05 p.m. on 16.10.2007. He further contended that the commercial offer of
16.10.2007 was pursuant to the request of the respondent on 10.10.2007 and on
the basis of a similar transaction which had been concluded in the previous
month between the parties. By taking me through various e-mails exchanged
between the parties, he contended that the charter was entered into a contract
by the parties on 17.10.2007 i.e. the next day. He finally submitted that from
the materials it was established beyond doubt that the intention of parties in
case of any dispute between them arising out of the contract which was
concluded on 16.10.2007 at 3.06 p.m. shall be settled through arbitration. On
the other hand, Mr. C.A. Sundaram, learned senior counsel for the respondent
contended that there was no concluded contract between the parties and that the
agreement between the petitioner and the respondent was only in respect of the
number of shipments (two or five) and nothing more. According to him, there is
no arbitration agreement and that clause 6 is vague and ambiguous. He further
contended that even in the legal notice dated 01.09.2008 issued by the
petitioner's counsel, there is no specific reference to clause 6 of the
commercial offer but mentioned only clause 29 of the purchase order exchanged
between the parties on 08.11.2007 but the present petition before this Court
mentions both of them. He also pointed out that the Charter Party Agreement
(CPA) entered into between the petitioner and the ship owner is only a draft.
Further, there were differences in the purchase orders exchanged between the
parties on 08.11.2007 and that it is only a draft form and prayed for dismissal
of the present petition.
7) It is
the categorical claim of the petitioner that a commercial offer containing an
arbitration clause conveyed through e-mail dated 15.10.2007 for the supply of
bauxite to the respondent is a valid offer. This offer was to expire by noon
the following day i.e. on 16.10.2007. It is the definite case of the petitioner
that after several exchanges of e-mails and agreeing on the material terms of
the contract, the respondent conveyed their acceptance of the offer through
e-mail on 16.10.2007 confirming the supply of five shipments of bauxite to be
supplied from Australia-Vizag/Kakinada. Based on the acceptance by the
respondent, it is the claim of the petitioner that they concluded the deal with
the Bauxite supplier in Australia on 16.10.2007 and entered into a binding
Charter Party Agreement with the ship owner in Oslo on 17.10.2007. It was also
pointed out that a formal contract containing further detailed arbitration
clause was also sent by the respondent to the petitioner on 08.11.2007 which
was accepted with some minor changes by the petitioner in the same evening.
Though exchange of e-mails were admitted by the respondent, it is their specific
stand that there was no concluded contract and in the absence of the same, the
petitioner cannot enforce certain obligations reflected in those e-mails and
avail arbitration clause as if the respondent has executed a formal agreement.
In the light of the controversy and in view of the fact that copies of e- mails
exchanged between the officers of the petitioner and respondent on various
dates which are placed in the form of annexures, it is useful to refer the
relevant correspondence in order to understand their claim:
Annexure P 1 Shanika From: Swaminathan G [firstname.lastname@example.org] Sent: Tuesday,
October 09, 2007 2:37 PM To: Rajesh Mohata; Swayam Mishra Cc: S R Subramanyam;
Shanika Subject: LM Grade Bauxite specs `1 (2). Doc Importance: High Attachments:
LM Grade Bauxite specs'1 (2). Doc Dear Rajesh, This has a reference to our
earlier mails regarding the specs for the fresh cargoes. After discussions with
RTA their comments are reproduced.
maintain our position that we are not able to accurately measure reactive
silica at our Weipa lab for us to place a bonus/penalty on and that any
rejection criteria on silica is unreasonable. It is for this reason that we are
only prepared to revise our offer on total silica with a Base Grade of 4.5%. We
are prepared to increase this bonus/penalty to US$1.50 per % total silica
either side the Base Grade. This we believe is a fair compensation to Vedanta
and is our final offer.
we cannot make this an open ended offer as we need to fill our shipping slots
set aside for these cargoes in November and December. We have already lost the
October opportunity. Freight and spot prices for bauxite have all moved up
since we started this negotiation and we are making offers for 2008 cargoes at
$4 higher than your offer. Therefore, we have to put a validity on this until
close of business Friday, 12 October after which this offer will be subject to
prepared a revised schedule of specs which is attached.
not yet confirmed with RTA but once you agree to go by this then we can take up
with them. Rejection points are also to be agreed by them. Further the freights
have gone up substantially since we last made the shipment. Hence we have to
freeze the quality specs first and then take up with RTA for confirmation and
then get the vessel freight.
request you to revert urgently before closing today as this area is all closed
from Thursday Best regards Swaminathan Low Monohydrate Grade Bauxite Typical Analysis
Parameter Range Base spec Bonus/Penalty Rejection Trihydrate 42-46% 45% Min.
Bonus US $0.50 per Below alumina tonne per percentage 41% (THA) point fraction
pro-rate above 45% Penalty US$ 0.50 per tonne per percentage point fraction
pro-rate below 45% Penalty US $1.00 per tonne per percentage point fraction
pro-rate below 42%.
3-5% 4.5% Bonus US $0.50 per Above alumina Max. tonne per percentage 5.0% (MHA)
point fraction pro-rate below 4.5%.
US$ 0.50 per tonne per percentage point fraction pro-rate above 4.5%.
Silica 4-6% 4.5% Bonus US $1.50 per N/A Max. tonne per percentage point
fraction pro-rata below 4.5%.
US$ 1.50 per tonne per percentage point fraction pro-rata above 4.5% B) Shanika
From: Swayam Mishra [email@example.com] Sent: Wednesday, October 10,
2007 11:16 AM To: Swaminathan G Cc: Rajesh Mohata; Shanika; SR Subramanyam;
Chinmayee Panda; N.Chellappa; Hukum Chand Dahiya Subject: Re: LM Grade Bauxite
specs `1 (2). Doc Attachments: LM Grade Bauxite specs'1 (2). Doc Dear Mr.
Swaminathan, Please find our observation in the attached sheet. Kindly give
your confirmation for the same.
Swayam Mishra Commercial Department Vedanta Aluminium Ltd., Lanjigarh Dist:
Kalahandi Pin: 766027 Orissa 9937251390 C) Shanika From: Swaminathan G
[firstname.lastname@example.org] Sent: Wednesday, October 10, 2007 1:30 PM To: Swayam
Mishra Cc: Rajesh Mohata; Shanika; SR Subramanyam; Chinmayee Panda; N.Chellappa;
Hukum Chand Dahiya Subject: Re: LM Grade Bauxite specs `1 (2). Doc Importance:
High Dear Swayam, We reviewed the reply below and this not acceptable to RTA or
unable to improve on the proposal given from our side which itself needs to be
ratified by RTA.
also keep in mind the time limit and we need to have time for obtaining
freights which is the most difficult aspect in the present market.
final reply may be given to us before close of office hours today.
Swami D) Shanika From: Swayam Mishra [email@example.com] Sent:
Wednesday, October 10, 2007 7:17 PM To: Swaminathan G Cc: Chinmayee Panda;
Hukum Chand Dahiya N. Chellappa; Rajesh Mohata; Shanika; SR Subramanyam;
Re: LM Grade Bauxite specs `1 (2). Doc Dear Mr. Swaminathan, Please send your
rates at your proposed quality parameters on FOB basis and on CIF basis,
also be interested to have separate rates for 2 shipments and for the complete
offer of 2 Lac MT.
Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt: Kalahandi
Pin: 766 027 Orissa E) Annexure P-2 Shanika From: Swaminathan G
[firstname.lastname@example.org] Sent: Monday, October 15, 2007 4:46 PM To: Rajesh
Mohata; Swayam Mishra Cc: S R Subramanyam; Shanika Importance: High
Attachments: Offer for Mono Bxt.Pdf Dear Rajeshji, Please find attached our
offer for the two options as desired by you.
note the validity of the offer until 1200 IST tomorrow. Freights are going up
continuously and have jumped since we last gave you the offer.
decision will be helpful otherwise we may lose this freight offer too.
an early response.
regards G. Swaminathan General Manager Trimex International P.O. Box 17056
Ext. 209 Fax:-971-4-8836410 Mob:-971-50-6455819 TRIMEX The Mineral People
COMMERCIAL OFFER Company: M/s Vedanta Alumina Ltd. Offer No: TID/F/223/2007
Lanjigarh Date: October 15, 2007 Kind Attn: Mr. Rajesh Mohata General Valid
Until: October 16, 2007 Manager (Commercial) 1200 noon IST Product Quantity
Price per Delivery Terms Payment Description* tonne Terms Low OPTION 1 US$93.50
CIF Free Out Irrevocable Monohydrate (2) pmt (US Visakhapatnam, L/c for Grade
Shipments Dollars India (C) clause 100% Bauxite of 45,000 Ninety Cargo cover
Invoice (Australian mt +/- 10% Three and value to be Origin) at Shipper's Cents
Fifty established Option only) 30 days before each OPTION II shipment (5)
Shipments -92.5% of 45, 000 payable at mt +/- 10% sight at Shipper's -7.5%
option payable within 30 days after completion of discharge *Please see
attached Annexure I for detailed product specifications Shipment Discharge port
Discharge Demurrage/Desp. Shipment Lot rate OPTION I (Non Oil Mooring 8000mt PD
US$ 75,000 per OPTION I (2) at SHINC. day pro rata Half In Nov. & Shipments
Visakhapatnam, NOR Despatch Dec. 2007 OPTION II India) ATDN (5) SHINC OPTION II
Shipments WIBON, From Nov.
to WCCON March 08.
hrs turntime USC Any time used to count Additional Information/Comments:
details (all about): age-Not over 25 years, 4 x 20 mt gears, 8-10 cbm grabs
Draft: buyers to guarantee draft of 12 mtrs, at discharge port Quantity: Draft
survey at discharge port by mutually agree independent surveyor will be final.
Invoice for initial payment as per Producer's Quality Certificate Balance 7.5%
payment will be based on analysis done by Independent surveyor Bonus/Penalty:
As per Annexure I
applicable any charges payable at discharge port (custom duty, taxes etc.)
other than our stated sales conditions will be to buyers account.
of sale- all sales are concluded on the following terms, unless varied by
written agreements between us. Neither our agents nor our associated companies
are authorized to vary these terms.
shall not be liable by reason of any defect (including non- conformity with
specification or sample) unless we receive written notice of the defect within
15 days of delivery. Our liability in that event will be limited to product
related compensation after discussions and suitable joint analysis wherever
applicable. In case of joint analysis being agreed upon for confirming the
product quality/penalty determination, the above should be arranged by the
buyer within 30 days of product delivery to the customer.
shall have no liability under this contract or by reason of any representation,
warranty or duty for any direct, indirect, special or consequential loss or
damage, costs or expenses arising out of the composition, supply, packaging,
handling or use of products.
stated otherwise, products are sold strictly to the offered sale condition and
payments are due on the dates as applicable.
are valid upto 1200 hrs IST 16.10.2007 unless withdrawn by notice from us
during that period.
Interest may be charged on overdue amount wherever applicable as per our terms
mentioned in commercial/payment invoice.
contract is governed by Indian Law & Arbitration in Mumbai courts.
Trimex International FZE Name: G. Swaminathan (computerized offer-Signature not
required) TRIMEX INTERNATIONAL FZE P.O. BOX 17056, Jabel Ali, Dubai, UAI
Tel:971-4-8835544 Fax:-971-4-8836410 Telex: (893) 47804 Email
F) Annexure P-3 Shanika From: Swayam Mishra [email@example.com] Sent:
Monday, October 15, 2007 5:34 PM To: Swaminathan G Cc: Rajesh Mohata; Shanika;
SR Subramanyam; Chinmayee Panda Subject: Offer for imported Bauxite Dear Mr.
Swaminathan, We have the following observations related to your offer:
Bonus/Penalty Clause for THA: Penalty US $ 1.00 per tonne per percentage point
fraction pro-rata below 42%.
Rejection Criteria for Total Silica: Since the range is between (4- 6%), so
rejection will be for Total Silica > 6%.
let us have the FOB rates as well.
4. As you
are stating that the freight market is expected to go up in the coming months,
so the rate for the supply of 2 shipments should be less than the present rate
quoted by you for 5 rates.
forward for your positive response.
Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt: Kalahandi
Pin: 766 027 Orissa Shanika G) From: Swaminathan G [firstname.lastname@example.org]
Sent: Monday, October 15, 2007 6:04 PM To: email@example.com Cc:
Rajesh.firstname.lastname@example.org; Shanika; SR Subramanyam;
Subject: Re: Offer for imported bauxite Dear Swayam, THA penalty rate is as
agreed/ratified by RTA.
rejection cls not agreed by RTA. Given at our risk but we cannot make it
coincide with maxm of range as it is too risky for us. In fact, we also refused
rejn cls but Mr. SRS argued on this and persuaded us to put it in for your
sell C N F basis.
rates presently are even more firm than next year. But overall we have this
package from ship owners.
regards Swami H) From: Swayam Mishra [email@example.com] Sent:
Tuesday, October 16, 2007 11:28 AM To: Swaminathan G Cc:
SR Subramanyam Subject: Re: Offer for imported bauxite Dear Mr. Swaminathan, As
assured by Mr. SRS that the material is homogeneous in nature, and looking at
the result of the present shipment, we do not think that keeping a rejection
limit at 6% is a risk for you.
let us have the cost break-up (Material+Coastal Freight).
also like to have a rate for CIF Kakinada port.
Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt:
Kalahandi Pin: 766 027 Orissa I) Shanika From: Swaminathan G
[firstname.lastname@example.org] Sent: Tuesday, October 16, 2007 11:48 AM To:
Rajesh.Mohata@vedanta.co.in; Swayam Mishra Cc: S R Subramanyam; Shanika
Subject: Offer for bauxite Importance: High Urgent Dear Swayam, The time has
just expired. We still have a little more than 1 hour before our offer from
Owners expires. Hence we can extend this by another 1 hour which is 1300 hrs
let us know your decision either way as we would like to keep all parties
informed in time about the developments.
Swami J) Shanika From: Swaminathan G [email@example.com] Sent: Tuesday,
October 16, 2007 11:54 AM To: Swayam Mishra Cc: ChinmayeePanda@vedanta.co.in;
Rajesh.firstname.lastname@example.org S R Subramanyam; Shanika Subject: Offer for
imported bauxite Swayam, Where will you discharge and store in Kakinada port?
Is it permissible to take it to Berth and if so what is the draft you can
guarantee? If it is anchorage, it is heavily congested and also you cannot
achieve the discharge rate of even 4000t per day. Freight will shoot up and it
will be unworkable.
Swami K) Shanika From: Swayam Mishra [email@example.com] Sent:
Tuesday, October 16, 2007 1:38 PM To: Swaminathan G Cc:
S R Subramanyam; Sarika Singh Subject: Offer for imported bauxite Dear Mr.
Swaminathan, The Demurrage rate should be decreased and made as per last
shipment. Please negotiate the same with the Vessel Owners. Either reduce the
freight rate or the demurrage rate.
confirm at the earliest.
Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt: Kalahandi
Pin: 766 027 Orissa L) Shanika From: Shanika[firstname.lastname@example.org] Sent:
Tuesday, October 16, 2007 2:01 PM To: `Swayam Mishra' Swaminathan G' Cc:
ChinmayeePanda@vedanta.co.in; Rajesh.email@example.com; S R Subramanyam;
Sarika Singh Subject: RE: Offer for imported Bauxite Dear Mr. Swayam, As
confirmed by Mr. Swaminathan the Demurrage rate is US$ 69,000 per day. This is
the offer given by owners and cannot be reduced any further.
Shanika Peiris Assistant Manager-Commercial TRIMEX INITERNATIONAL FZE P.O. BOX
17056, Dubai, UAI Tel:971-4-8835544, Ext. 208 Fax:-971-4-8836410 971-6522083 M)
Shanika From: Swayam Mishra [firstname.lastname@example.org] Sent: Tuesday, October
16, 2007 2:41 PM To: email@example.com `S R Subramanyam'; `Swaminathan G'
Cc: ChinmayeePanda@vedanta.co.in; Rajesh.firstname.lastname@example.org;
Singh Subject: Re: Offer for imported bauxite Dear Swaminathan, We confirm the
order for 5 shipments as per our last discussions.
same time we would like to have a termination clause after 2 shipments.
Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt:
Kalahandi Pin: 766 027 Orissa N) From: Swayam Mishra [email@example.com]
Sent: Tuesday, October 16, 2007 3:06 PM To: Swaminathan G' Cc:
Shanika; S.R. Subramanyam; T. Prasanna Kumar Patro; N. Chellappa Subject: Re:
Offer for imported bauxite Dear Swaminathan, We confirm the deal for 5
Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt:
Kalahandi Pin: 766 027 Orissa O) Shanika From: Swaminathan G
[firstname.lastname@example.org] Sent: Tuesday, October 16, 2007 3:49 PM To:
email@example.com Cc: ChinmayeePanda@vedanta.co.in;
Rajesh.firstname.lastname@example.org;email@example.com Shanika; SR Subramanyam;
n. firstname.lastname@example.org 24 Subject: Re: Offer for imported bauxite Dear
Swayam, Thanks for the confirmation just in time to go to Owners Regards Swami
P) Shanika From: Swaminathan G [email@example.com] Sent: Tuesday, October
16, 2007 3:57 PM To: Shaun.Barry@comalco.riotinto.com.au;
Cc: Shanika Subject: 200K Bauxite for Vedanta Dear Shaun Deal is through for 5
give you shipping schedule agreed with owners and details by tomorrow.
word of appreciation to the RTA team led by Mark for the support and patience
in putting this thru. It's like carrying coal to Newcastle!!! Thanks &
Regards Swami Q) Shanika From: Swaminathan G [firstname.lastname@example.org] Sent:
Wednesday, October 17, 2007 11:12 AM To: email@example.com Cc:
ChinmayeePanda@vedanta.co.in Rajesh.firstname.lastname@example.org; Shanika; SR
Subject: Re: Inactive Role of Agent.
Swayam Small check n revert and advise them suitably.
please send draft agreement.
Swami --------Original Message------- From: Swayam
Mishraswayam.email@example.com To: Swaminathan G
Subramanyam; Suvendu.Sekhar Sahoo Suvendu.Sahoo@vedanta.co.in Sent: Wed Oct 17
10:56:43 2007 Subject: Inactive role of Agent Dear Mr. Swaminathan, On one hand
where we are going to do 5 future shipments of imported bauxite, it is sad to
notice that your agent at Vizag port is not taking enough initiative to handle
the first shipment even!!! While our stevedores and representatives are
constantly following up with the port authorities to grant us a berth, your
agent is being too noncommittal. Please advice your agent to play a more active
role in the whole process.
Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt:
Kalahandi Pin: 766 027 Orissa R) Shanika From: Swaminathan G
[firstname.lastname@example.org] Sent: Saturday, October 20, 2007 09:08 AM To:
email@example.com Cc: Shanika; SR Subramanyam;
Contract for bauxite shipments Importance: High Dear Swayam, As per the
agreements with Owners the following is the schedule of shipments:
agreed with owners:
2007-15th/30th December 2007-Suggested 5th/20th (to be agreed) January
2008-15th/30th February 2088-14th/28th March 2008-15th/30th In view of this, we
need to quickly complete the execution of agreement and establishing of L/c as
discussed on Thursday. I am awaiting the draft agreement so that we can move
forward. Also please confirm if you have surrendered the Original B/L for the
present consignment to Master as vessel is likely to finish soon.
Swami Annexure P-4 VAL SITE, Lanjigarh Minutes of the Meeting M/s Vedanta
Aluminium Limited M/s Timex Group Mr. Rajesh Mohata Mr. G. Swaminathan Mr.
Venkat Rao Mr. S.R. Subramaniam Mr. Swayam Mishra Mr. N. Chellappa Ms. Sarika
Singh *The Agenda of the meeting was:
of Bauxite from Katni
of Bauxite from Gujarat
Imported Bauxite from Australia Bauxite from Katni 1. Trimex will give its
commercial offer within 20th Nov. 2007 to VAL.
has asked Trimex to re-work the offer to provide a supply schedule till March
30th, 2008 against Trimex's deadline of June 2008.
rate offered by Trimex is Rs. 1250 PMT (FOB) Okha/Porbander). VAL has asked for
a decrease in rates. Trimex will provide its final offer by 29.10.2007.
the existing contract of supply of 10000 MT of bauxite through rakes, further
movements will ensue after the due discussions. For the punitive charges levied
by railways against the 1st Rake moved from Okha, Trimex has been advised to
take up the issue with the Railways officials at Okha.
Bauxite from Australia 1. For the shipments under the proposed new contract of
2 Lacs MT.
requested to clearly mention the following clauses:
i) As per
Trimex offer No. TID/F/223/2007 dated 15th October 2007 and accepted by VAL,
the price is on CIF-FO basis. As per Trimex under such a situation the berthing
responsibility should be with VAL.
copy of base Charter Party Agreement and fixture terms shall be provided by
Trimex, which should be deemed incorporated in the Purchase agreement.
Discharge rate agreed should be clearly mentioned in the Purchase agreement.
will confirm on the feasibility of discharging the cargo at Kakinada port and
accordingly TRIMEX will discuss with the Vessel Owners.
the demurrage incurred in the shipment of MV Nena C vide Order No. VAL/OPRN/526
dated 10.09.07, Trimex claims that the same is on VAL's account as the
agreement was on CIF- Visakhapatnam basis. VAL will give its opinion on the
has asked to finalise on the new contract and the demurrage by end of office
hours on 30.10.2007.
(Rajesh Mohata) (G. Swaminathan) Sd/- Sd/- (N. Chellapa) (SR Subramaniam) Sd/-
(Venkat Rao) Sd/- (Sarika Singh) Sd/- (Swayam Mishra) S) Annexure P-5
Swaminathan G From: Swaminathan G Sent: Tuesday, October 30, 2007 12:23 PM To:
`Swayam Mishra'; Rajesh.Mohata@vedanta.co.in Cc: SR Subramanyam; Shanika;
ChinmayeePanda@vedanta.co.in Subject: FW:BULKHANDING TBN/TRIMEX-WEIPA/VIJZAG
Dear Swayam, With reference to our discussions, please find the fixture terms
for the new contract. We are getting the draft CP for this COA and hence we
shall send that shortly instead of the base CP as it will contain all
amendments for this business. We are expecting this any time today from Owner.
Swami T) Annexure P-6 srs From: Shanika (firstname.lastname@example.org) Sent: Friday,
November 02, 2007 6:40 PM To: `Swayam Mishra' CC: `SR Subramanyam';
Rajesh.Mohata@vedanta.co.in Subject: Draft CP for 5 x 45000 mt LM Bauxite
Attachments: LM Bxt COA PC.pdf; LM Bxt COA RC.doc Attn: Mr. Swayam Mishra Copy
of draft C/P just received from owners is attached. It is very likely that
Owners will nominate the performing vessel for the first shipment in November
2007. Hence, we request you to expedite finalization of contract and L/c so as
to avoid any delays.
Peris Assistant Manager-Commercial TRIMEX INTERNATIONAL P.O. BOX 17056, Dubai,
UAE Tel:971-4-8835544 Ext. 208 Fax:-971-4-8836410, 971-5-6522083 U) Shanika
From: Swaminathan G [email@example.com] Sent: Wednesday, November 07, 2007,
08:45 AM To: Swayam Mishra Cc: ChinmayeePanda@vedanta.co.in
Rajesh.firstname.lastname@example.org; Shanika, S R Subramanyam;
Rao; KS Bala Subject: Re: Import Consginment (2 lacs) Importance: High Top
Priority/Most Urgent Dear Swayam, At the outset wish you all a very Happy
We got a
feed back from owners late last night that they will look at your request on
arrival draft at 11.5 mts and Kakinada port on a case basis at the time of each
nomination without Guarantee. This is due to the reason they are not sure what
kind of vessel will be in position in that area.
as already mentioned let us proceed with contract and L/c as we are left with
bare minimum time before Owner will nominate a vessel for the first laycan
starting 15-30 Nov anytime from tomorrow. We have to establish our L/c on RTA
and this is already overdue.
have too much pressure at last minute and could result in demurrage at loadport
as holidays are on from tomorrow in Middle East and India.
rush the agreement for signature.
Regards Swami V) Shanika From: Shanika [email@example.com] Sent: Wednesday,
November 07, 2007, 11:20 AM To: Swayam Mishra Cc: ChinmayeePanda@vedanta.co.in
Rajesh.firstname.lastname@example.org; S R Subramanyam; `Swaminathan G' Subject:
Agreement for 5 x 45, 000 mt LM Bauxite Importance: High Urgent Attn: Mr.
Swayam Mishra We have just received feedback from Owners. On 11.5 meters Draft
they have indicated an increase of US$3.5 pmt which will make the price US$97.00
pmt CIF Free Out kakinada if you were to have an option additionally for
Kakinada. The following terms would be applicable:
Discharge port to be declared before vessels arrival at load port.
Discharge basis Kakinada "One Safe Berth"
discharge port terms etc., will be the same. You may introduce this into the
Contract as an additional clause and prepare draft urgently and sent it to us.
Shanika Peiris Assistant Manager-Commercial Shanika W) From: Swayam Mishra
[email@example.com] Sent: Thursday, November 08, 2007 12:28 PM To:
firstname.lastname@example.org Cc: ChinmayeePanda@vedanta.co.in;
Singh; S.R. Subramanyam; `Swaminathan G'; Venkateshwar Rao;
Chellappa Subject: Option on Draft and Port Dear Shanika, Please confirm if the
increase in rate is due to the decrease in draft or change in port.
Swayam Mishra Commercial Department Vedanta Aluminium Ltd. Lanjigarh Distt:
Kalahandi Pin: 766 027 Orissa X) Annexure P-8 From: Swayam Mishra [email@example.com]
Sent: Thursday, November 08, 2007 2:28 PM To: Swaminathan G Cc:
Rajesh.firstname.lastname@example.org; Shanika; S.R. Subramanyam; N.
Sarika Singh; Chinmayee Panda; Venkateshwar Rao;
Draft Contract for Import Bauxite---5 shipments Attachments: Trimex-imported-5
shipments 1.doc Dear Mr. Swaminathan, Please find attached the draft contract.
Swayam Mishra Commercial Department PO NO: VAL/OPRN/719 Date-08.11.2007
PURCHASE ORDER M/s Trimex International FZE Dubai Sub: Purchase Order for
supply of Low Monohydrate Grade Bauxite Ref: Offer No. TID/F/223/2007, Dated
15.10.2007 and our subsequent discussions held there on.
With reference to the above offer and subsequent discussions we had with you, we
are pleased to place this Purchase Order on you for supply of 225000 +/- 10% MT
Low Monohydrate Grade Bauxite as per the following terms and
Arbitration The Parties hereto shall endeavour to settle all disputes and
differences relating to and/or arising out of the Contract amicably.
event of the Parties failing to resolve any dispute amicably the same shall be
referred to Arbitration in accordance with the Arbitration and Conciliation Act
1996, as is prevalent in India. Each Party shall be entitled to nominate an
Arbitrator and the two Arbitrators so nominated shall jointly nominate a third
presiding Arbitrator. The Arbitrators shall give a reasoned award.
of arbitration shall be Mumbai, Maharashtra in accordance with Indian Law and
the language of the arbitration shall be English.
Parties further agree that any arbitration award shall be final and binding
upon both the Parties.
Parties hereto agree that the Seller shall be obliged to carry out its
obligations under the Contract even in the event a dispute is referred to
Governing Law This Contract shall be construed in accordance with and governed
by the laws of Indian and in the event of any litigation the Courts in Mumbai
shall have exclusive jurisdiction.
order is being issued in duplicate. You are requested to send the duplicate
copy duly signed as a token of acceptance of the terms and conditions.
you Yours faithfully For Vedanta Alumina Limited Rajesh Mohata GM-Commercial
AA) Re: Draft Contract SHANIKA From: Swaminathan G [email@example.com]
Sent: Thursday, November 08, 2007 6:29 PM To: firstname.lastname@example.org Cc:
SR Subramanyam; Shanika; Rajesh.Mohata@vedanta.co.in;
Subject: Re: Draft Contract In final stage Shall send very soon Regards AB)
Annexure P-10 SHANIKA From: Swaminathan G [email@example.com] Sent:
Thursday, November 08, 2007 7:30 PM To: Swayam Mishra Cc:
Rajesh.Mohata@vedanta.co.in; Chinmayee.Panda@vedanta.co.in; SR Subramanyam;
Venkateshwar Rao Subject: Trimex-Imported_5 shipments 1.doc Importance : High
Attachments: Trimex-Imported_5 shipments 1.doc Dear Swayam, Please find the
draft contract with clarification on various points as discussed in meetings
and on phone today.
confirm the same in order.
Annexure P-12 From: Rajesh Mohata [mail to: Rajesh.Mohata@vedanta.co.in] Sent:
Monday, November 12, 2007 2:18 PM To: Swaminathan G; Shanika; SR Subramanyam
Cc: Venkateshwar Rao; Swayam Mishra; Umesh Mehta Subject: Trimex International
Dear Mr. Swaminathan, We have recently received bauxite from first import
congisnment at Plant. Our operation team is in process to find out recovery and
value addition for using this bauxite in actual plant condition. This may take
some time. In view of this we may have to hold procurement for the next
request you to put on hold the next consignment till further advise.
Rajesh Mohata Vedanta Aluminium Ltd.
+91 99372 51229 (Please note with immediate effect our company name changed to
"Vedanta Aluminium Ltd.") AD) SHANIKA From: Swaminathan G
[firstname.lastname@example.org] Sent: Monday, November 12, 2007 3:20 PM To: Rajesh
Mohata Cc: Venkateshwar Rao; Swayam Mishra; Umesh Mehta; Shanika; SR
Subramanyam Subject: Re: Trimex International Importance : High Dear Mr.
Rajesh, This is a bit shocking at this juncture as vessel nomination is due
from the Owners any time now against the COA.
have to go them urgently and ask them to defer the first vessel by 15 days
until 1st December as proposed by you on phone. In that case there will be two
vessels in December subject to RTA agreement. There might be claims from them.
But before we talk to them we need VAL's confirmation that any claims from
Owners for the delay or cancellation of any or all shipment(s) under this
contract will be fully guaranteed to us and that VAL will pay the amount
urgent as we have to act fast before Owners nominate any vessel.
As far as
RTA is concerned we shall take-up and hope they will agree to a revised
schedule as they are fully booked for December and thereafter this will have
also to be agreed with Owners.
respond by return mail for us to talk to RTA/Owners.
try and do our best but before that we need VAL's clear confirmation on above.
Swami From the materials placed, it has to be ascertained whether there exists
a valid contract with the arbitration clause. It is relevant to note that on
15.10.2007 at 4.26 p.m. the petitioner submitted commercial offer wherein
clause 6 contains arbitration clause i.e. "this contract is governed by
Indian law and arbitration in Mumbai courts". At 5.34 p.m. though
respondents offered their comments, as rightly pointed out by Mr.
K.K.Venugopal, no comments were made in respect of `arbitration clause'.
further seen that at 6.04 p.m. the petitioner sent a reply to the comments made
by the respondent. Again on 16.10.2007, at 11.28 a.m. though respondents
suggested certain additional information on the offer note, here again no
suggestion was made with regard to arbitration clause.
a.m. the petitioner sent an e-mail extending validity of the offer by another
one hour. At 01.38 p.m., the respondent made certain suggestions on the
demurrage asking the petitioner to either reduce the freight rate or the
demurrage rate. On the same day at 02.01 p.m., the petitioner sent a reply on
the demurrage stating that the rates cannot be reduced any further. At 02.41
p.m., the respondent informed the petitioner that they would like to have a
termination clause after two shipments. At 03.06 p.m., the petitioner sent a
mail stating that "no owner will accept this condition.
may accept two or five quickly". At 03.06 p.m. the respondent accepted the
offer for five shipments.
response to the same at 03.49 p.m., the petitioner thanked the respondent for
acceptance and conveyed that it was "just in time" to go to the ship
owners. At 03.57 p.m. the petitioner finalized the contract with the bauxite
supplier in Australia. Apart from the above minute to minute correspondences
exchanged between the parties regarding offer and acceptance, as rightly
pointed out by Mr. Venugopal the offer of 15.10.2007 contains all essential
ingredients for a valid acceptance by the respondents namely, 1). Offer
Validity period 2) Product Description 3) Quantity 4) Price per tonne 5)
Delivery Terms (CIF) 6) Payment Terms (Irrevocable L/C) 7) Shipment Lots 8)
Discharge Port 9) Discharge Rate with international shipping acronyms 10)
Demurrage Rate 11) Period of Shipment 12) Vessel Details 13) Draft (Port/Berth
Capacity corresponding to height of cargo) 14) Stipulations as to Survey by
Independent Surveyors 15) Quality benchmark 16) Bonus/Penalty Rates & 17)
Applicable Laws (Indian Law) and Arbitration.
minute to minute correspondence exchanged between the parties, all the
conditions prescribed which had been laid down, awareness of urgency of
accepting the offer without any further delay to avoid variation in the freight
or other factors, coupled with the e-mail sent on 16.10.2007 at 3.06 p.m. under
the subject "re: offer for imported bauxite" stated in unequivocal
terms, i.e. "we confirm the deal for five shipments", would clearly
go to show that after understanding all the details and the confirmation by the
respondent, the petitioner sent a reply stating that "thanks for the
confirmation, just in time to go to the ship owners". All the above
details clearly establish that both the parties were aware of various
conditions and understood the terms and finally the charter was entered into a
contract by the parties on 17.10.2007.
C.A. Sundaram, learned senior counsel for the respondent taking me through the
same emails/correspondence submitted that such clauses being unclear and
ambiguous, cannot be permitted to stand on its own footing so as to deprive the
respondent of its valid defence. He also reiterated that in the absence of a
concluded and binding contract between the parties, the arbitration clause
contained in draft agreement cannot be relied on by the petitioner. He further
pointed out that the arbitration clause as contained in the commercial offer
suffers from vice of being unclear and ambiguous and, therefore, is not capable
of being enforced.
9) In the
light of the details which have been extracted in the earlier paragraphs, I am
unable to accept the stand of the respondent. It is clear that if the intention
of the parties was to arbitrate any dispute which arose in relation to the
offer of 15.10.2007 and the acceptance of 16.10.2007, the dispute is to be
settled through arbitration. Once the contract is concluded orally or in
writing, the mere fact that a formal contract has to be prepared and initialed
by the parties would not affect either the acceptance of the contract so entered
into or implementation thereof, even if the formal contract has never been
acceptance conveyed by the respondent, which has already been extracted supra,
satisfies the requirements of Section 4 of the Indian Contract Act
reads as under:
when complete- The communication of an acceptance is complete.... as against
the acceptor, when it comes to the knowledge of the proposer."
pointed out by the learned senior counsel for the petitioner, when Mr.
Swaminathan of Trimex opened the email of Mr. Swayam Mishra of Vedanta at 3:06
PM on 16.10.2007, it came to his knowledge that an irrevocable contract was
concluded. Apart from this, the mandate of Section 7 of the Indian Contract Act stipulated that an acceptance must be absolute and
unconditional has also been fulfilled. It is true that in the first acceptance
conveyed by the respondent contained a rider, namely, cancellation after 2
shipments which made acceptance conditional. However, taking note of the said
condition, the petitioner requested the respondent to convey an unconditional
acceptance which was readily done through his email sent at 3:06 PM with the
words "we confirm the deal for 5 shipments", which is unconditional
and unqualified. As rightly pointed out by the learned senior counsel for the
petitioner, the respondent was wholly aware of the fact that its agreement with
the petitioner was interconnected with the ship owner. In other words, once the
offer of the petitioner was accepted following a very strict time schedule, the
respondent could not escape from the obligations that flowed from such an action.
Court of Appeal in the case of Pagnan SPA vs.Feed Products Ltd.,  Vol. 2,
Lloyd's Law Reports 619 observed as follows:
is sometimes said that the parties must agree on the essential terms and that
it is only matters of detail which can be left over. This may be misleading,
since the word `essential' in that context is ambiguous. If by `essential' one
means a term without which the contract cannot be enforced then the statement
is true: the law cannot enforce an incomplete contract. If by `essential' one
means a term which the parties have agreed to be essential for the formation of
a binding contract, then the statement is tautologous. If by `essential' one
means only a term which the Court regards as important as opposed to a term
which the Court regards as less important or a matter of detail, the statement
is untrue. It is for the parties to decide whether they wish to be bound and,
if so, by what terms, whether important or unimportant. It is the parties who
are, in the memorable phrase coined by the Judge, "the masters of their
contractual fate". Of course, the more important the term is the less
likely it is that the parties will have left it for future decision. But there
is no legal obstacle which stands in the way of the parties agreeing to be
bound now while deferring important matters to be agreed later. It happens
every day when parties enter into so-called `heads of agreement'."
principle has been consistently followed by the English Courts in the cases of
Mamidoil-Jetoil Greek Petroleum Co. S.A. v. Okta Crude Oil Refinery AD, (2001)
Vol. 2 Lloyd's Law Reports 76 at p. 89; Wilson Smithett & Cape (Sugar) Ltd.
vs. Bangladesh Sugar and Food Industries Corporation, (1986) Vol. 1 Lloyd's Law
Reports 378 at p. 386. In addition, Indian law has not evolved a contrary
position. The celebrated judgment of Lord Du Parcq in Shankarlal Narayandas
Mundade v. The New Mofussil Co. Ltd. & Ors. AIR 1946 PC 97 makes it clear
that unless an inference can be drawn from the facts that the parties intended
to be bound only when a formal agreement had been executed, the validity of the
agreement would not be affected by its lack of formality.
present case, where the Commercial Offer carries no clause making the
conclusion of the contract incumbent upon the Purchase Order, it is clear that
the basic and essential terms have been accepted by the respondent, without any
option but to treat the same as a concluded contract.
Though Mr. C.A. Sundaram, learned senior counsel heavily relied on the judgment
of this Court in Dresser Rand S.A. v. Bindal Agro Chem Ltd., (2006) 1 SCC 751,
the same is distinguishable because in that case only general conditions of
purchase were agreed upon and no order was placed. On the other hand, in the
case on hand, specific order for 5 shipments was placed and only some minor
details were to be finalized through further agreement. This Court in Dresser
Rand S.A (supra) rejected the contention that the acceptance of a modification
to the General Conditions would not constitute the conclusion of the contract
itself. On the other hand, in the present case, after the suggested
modifications had crystallized over several emails.
in para 32 in Dresser Rand S.A (supra) this Court held that "parties
agreeing upon the terms subject to which a contract will be governed, when
made, is not the same as entering into the contract itself" whereas in the
case on hand, the moment the commercial offer was accepted by the respondent,
the contract came into existence. Though in para 44 of the Dresser Rand S.A
(supra), it is recorded that neither the Letter of Intent nor the General
Conditions contained any arbitration agreement, in the case on hand, the
arbitration agreement is found in clause 6 of the Commercial Offer. In view of
the same, reliance placed by the respondent on Dresser Rand S.A (supra) is
wholly misplaced and cannot be applied to the case on hand where the parties
have arrived at a concluded contract.
Venugopal pointed out that the Charter Party Agreements are governed as per
international shipping practices. The normal procedure is that the brokers from
both sides first agree on the vital terms over phone/telex (these terms relate
to Freight, Type of Ship, Lay Can (Period of shipping), Demurrage Rate, Cranes,
etc.) At this stage, no agreement is formally signed but the terms are binding
on both the parties, as per the Contract of Affreightment (CoA), which in the
present case was entered into on the next day, i.e. 17.10.2007. Certain minor
modifications could go on from either side on mutual agreement but in the
absence of any further modification, the originally agreed terms of the CoA are
binding on both the parties. Till the agreement is actually signed by both the
parties, the term draft is used. This does not mean that the terms are not
binding as between the Petitioner and the Ship-owners. Further, according to
him, the existence of the Charter Party, various international shipping
practices etc. which are to be pleaded in detail before the Arbitral Tribunal
once it is constituted and not before this Court since this means extensive
quoting of shipping laws and decided cases which cannot be done in the present
submissions cannot be under estimated.
in the counter affidavit as well as at the time of arguments Mr. C.A. Sundaram,
learned senior counsel for the respondent has pointed out various differences
between the version of the respondent and the petitioner.
a close scrutiny of the same shows that there were only minor differences that
would not affect the intention of the parties. It is essential that the
intention of the parties be considered in order to conclude whether parties
were ad idem as far as adopting arbitration as a method of dispute resolution
was concerned. In those circumstances, the stand of the respondent that in the
absence of signed contract, the arbitration clause cannot be relied upon is
liable to be rejected.
Conductors Ltd. vs. Euro Alloys Ltd. (2001) 7 SCC 728 was a case where a
contract containing an arbitration clause was between the parties but no
agreement was signed between the paties. The Bombay High Court held that the
arbitration clause in the agreement was binding. Finally, this Court upholding
the judgment of the Bombay High Court held that the arbitration clause in the
agreement that was exchanged between the parties was binding.
Shakti Bhog Foods Limited vs. Kola Shipping Limited, (2009) 2 SCC 134, this
Court held that from the provisions made under Section 7 of the Arbitration and
Conciliation Act, 1996 that the existence of an arbitration agreement can be
inferred from a document signed by the parties, or an exchange of letters,
telex, telegrams or other means of telecommunication, which provide a record of
17) It is
clear that in the absence of signed agreement between the parties, it would be
possible to infer from various documents duly approved and signed by the
parties in the form of exchange of e-mails, letter, telex, telegrams and other
means of tele-communication.
Though, Mr. C.A. Sundaram, relied on several decisions, in view of clear
materials in the form of emails/correspondence between the parties, those
decisions are not germane to the issue on hand.
Before winding up, it is useful to refer the latest decision of this Court
about the object of Arbitration and Conciliation Act, 1996. In Great Offshore
Offshore Engg. & Construction Co., (2008) 14 SCC 240, this Court while considering
the objects and provisions of the Arbitration and Conciliation Act, 1996, held:
The court has to translate the legislative intention especially when viewed in
light of one of the Act's "main objectives": "to minimize the
supervisory role of courts in the arbitral process." [See Statements of
Objects and Reasons of Section 4(v) of the Act.] If this Court adds a number of
extra requirements such as stamps, seals and originals, we would be enhancing
our role, not minimizing it. Moreover, the cost of doing business would
increase. It takes time to implement such formalities. What is even more
worrisome is that the parties' intention to arbitrate would be foiled by
formality. Such a stance would run counter to the very idea of arbitration,
wherein tribunals all over the world generally bend over backwards to ensure
that the parties' intention to arbitrate is upheld. Adding technicalities
disturb the parties' "autonomy of the will" (1' autonomie de la
volonte') i.e. their wishes. (For a general discussion on this doctrine see Law
and Practice of International Commerical Arbitration, Alan Redfern and Martin
Hunter, Street & Maxwell, London, 1986 at pp.4 and 53.)
Technicalities like stamps, seals and even signatures are red tape that have to
be removed before the parties can get what they really want--an efficient,
effective and potentially cheap resolution of their dispute. The autonomie de
la volonte' doctrine is enshrined in the policy objectives of the United
Nations Commission on International Trade Law (UNCITRAL) Model Law on
International Commercial Arbitration, 1985, on which our Arbitration Act is
Preamble to the Act.) the courts must implement legislative intention. It would
be improper and undesirable for the courts to add a number of extra formalities
not envisaged by the legislation. The courts' directions should be to achieve
the legislative intention.
of the objectives of the UNCITRAL Model Law reads as under:
liberalization of international commercial arbitration by limiting the role of
national courts, and by giving effect to the doctrine `autonomy of will',
allowing the parties the freedom to choose how their disputes should be
determined". [See Policy Objectives adopted by UNCITRAL in the preparation
of the Model Law, as cited in Law and Practice of International Commercial
Arbitration, Alan Redfern and Martin Hunter, Street & Maxwell, London
(1986) at p. 388 (citing UN doc.A/CN.9/07, Paras 16-27).]
goes without saying, but in the interest of providing the parties a
comprehensive review of their arguments, I note that once it is established
that the faxed CPA is valid, it follows that a valid contract and a valid
arbitration clause exist. This contract, the faxed CPA, does not suffer from a
conditional clause, as did the letter of intent. Thus, the respondent's
argument that the parties were not ad idem must fail."
view of the settled legal position and conclusion based on acceptable
documents, I hold that the petitioner has made out a case for appointment of an
Arbitrator in accordance with Clause 6 of the Purchase Order dated 15.10.2007
and subsequent materials exchanged between the parties. Inasmuch as in respect
of the earlier contract between the same parties, Justice B.N. Srikrishna,
former Judge of this Court is adjudicating the same as an Arbitrator at Mumbai,
it is but proper and convenient for both parties to have the assistance of the
same Hon'ble Judge.
Hon'ble Mr. Justice B.N. Srikrishna, former Judge of this Court is appointed as
an Arbitrator to resolve the dispute between the parties. It is made clear that
this Court has not expressed anything on the merits of the claim made by both
parties and whatever conclusion arrived at is confined to appointment of an
Arbitrator. It is further made clear that it is for the Arbitrator to decide
the issue on merits after affording adequate opportunity to both parties. In
terms of the Arbitration clause, the place of Arbitration is fixed at Mumbai.
The Arbitrator is at liberty to fix his remuneration and other expenses which
shall be borne equally by both the parties.
Arbitration petition is allowed on the above terms.
JANUARY 22, 2010.