𝐂𝐨𝐧𝐭𝐫𝐚𝐜𝐭 𝐂𝐥𝐚𝐮𝐬𝐞 𝐰𝐢𝐭𝐡 𝐫𝐞𝐟𝐞𝐫𝐞𝐧𝐜𝐞 𝐭𝐨 𝐞𝐱𝐩𝐞𝐫𝐭 𝐝𝐞𝐭𝐞𝐫𝐦𝐢𝐧𝐚𝐭𝐢𝐨𝐧 𝐝𝐨𝐞𝐬 𝐧𝐨𝐭 𝐜𝐨𝐧𝐬𝐭𝐢𝐭𝐮𝐭𝐞 𝐚 𝐯𝐚𝐥𝐢𝐝 𝐀𝐫𝐛𝐢𝐭𝐫𝐚𝐭𝐢𝐨𝐧 𝐚𝐠𝐫𝐞𝐞𝐦𝐞𝐧𝐭 (Calcutta High Court)

Mr. Birendra Bhagat vs. Arch Infra Properties Private Limited (Calcutta High Court)

The petitioner has filed the revised petition against the order of Commercial Court referring to the dispute between the parties to arbitration proceedings under section 8 of the Arbitration Act.

The petitioner contended that neither of the Contract clauses could not be termed as an arbitration clause since the clauses terms only the reference for settlement of drawings related dispute to an Architect.

“29 Disputes/Arbitrations:

(𝑎) 𝐹𝑜𝑟 𝑎𝑙𝑙 𝑑𝑖𝑠𝑝𝑢𝑡𝑒𝑠 𝑎𝑟𝑖𝑠𝑖𝑛𝑔 𝑜𝑢𝑡 𝑟𝑒𝑔𝑎𝑟𝑑𝑖𝑛𝑔 𝑞𝑢𝑎𝑙𝑖𝑡𝑦 𝑜𝑓 𝑤𝑜𝑟𝑘, 𝑑𝑟𝑎𝑤𝑖𝑛𝑔𝑠, 𝑀𝑎𝑡𝑒𝑟𝑖𝑎𝑙𝑠 – 𝑇ℎ𝑒 𝐴𝑟𝑐ℎ𝑖𝑡𝑒𝑐𝑡𝑠 𝑑𝑒𝑐𝑖𝑠𝑖𝑜𝑛 𝑤𝑖𝑙𝑙 𝑏𝑒 𝑎 𝑏𝑖𝑛𝑑𝑖𝑛𝑔 𝑓𝑜𝑟 𝑡ℎ𝑒 𝐸𝑚𝑝𝑙𝑜𝑦𝑒𝑟 𝑎𝑛𝑑 𝑡ℎ𝑒 𝐶𝑜𝑛𝑡𝑟𝑎𝑐𝑡𝑜𝑟.’

(𝑏) 𝐷𝑖𝑠𝑝𝑢𝑡𝑒𝑠 𝑤𝑖𝑡ℎ 𝑠𝑢𝑝𝑝𝑙𝑖𝑒𝑟𝑠 𝑒𝑡𝑐. : 𝐴𝑙𝑙 𝑑𝑖𝑠𝑝𝑢𝑡𝑒𝑠 𝑤𝑖𝑡ℎ 𝑠𝑢𝑝𝑝𝑙𝑖𝑒𝑟𝑠/𝑜𝑡ℎ𝑒𝑟𝑠 𝑎𝑛𝑑 𝑖𝑛𝑡𝑒𝑟𝑟𝑒𝑙𝑎𝑡𝑒𝑑 𝑝𝑟𝑜𝑏𝑙𝑒𝑚𝑠 𝑎𝑟𝑒 𝑡𝑜 𝑏𝑒 𝑠𝑒𝑡𝑡𝑙𝑒𝑑 𝑏𝑦 𝑡ℎ𝑒 𝐶𝑜𝑛𝑡𝑟𝑎𝑐𝑡𝑜𝑟 𝑎𝑛𝑑 𝑛𝑜 hashtag#𝑐𝑙𝑎𝑖𝑚 𝑤ℎ𝑎𝑡𝑠𝑜𝑒𝑣𝑒𝑟 𝑤𝑖𝑙𝑙 𝑏𝑒 𝑒𝑛𝑡𝑒𝑟𝑡𝑎𝑖𝑛𝑒𝑑.”

The Court observed the following:

✍️ In this case, the arbitration clauses which have been discussed hereinabove does not reflect the intention of the parties to submit to the independent arbitrator. Neither present and future disputes arising out the contract nor disputes with regard to payment arising out of the contract in present or in future, have been included in the settlement clause.

✍️Also, the Courts shall interpret arbitration clause in a manner so as to give effect to the agreement, rather than invalidate the same. The courts should, if the circumstances allow lean in favor of giving effect to an arbitration clause.

✍️Meaning thereby, the court should seek to give effect to the intention of the parties. Upon reading of the arbitration clauses and the circumstances, the court could not conclude that the parties intended to refer all kinds of disputes including money claims, payment/non-payment of bills etc. to an arbitrator.

✍️The court distinguished the expert determination from the Arbitral proceedings. The idea of expert determination is that during the implementation of a contract between the parties, the experts perform all such acts to ensure that the contract is successfully completed. Whereas an arbitral tribunal adjudicated the disputes based on on the evidence and submissions of the parties applying the law.

✍️Consequently, the court concluded that the decision of the commercial court is perverse and flawed and hence the revision petition was allowed.