Arbitration clause enforced despite non-compliance with pre-arbitration procedures; Sole Arbitrator appointed.
In a significant ruling, the Jammu and Kashmir High Court has upheld the arbitration clause in a construction contract dispute between M/s Hassan Roads Construction Company Private Limited and the J&K Economic Reconstruction Agency (ERA). Despite the petitioner's non-compliance with the pre-arbitration procedure, the court appointed a Sole Arbitrator to adjudicate the disputes, emphasizing the broad scope of the arbitration clause in the contract.
The petitioner, M/s Hassan Roads Construction Company, entered into a contract with ERA on August 7, 2021, for constructing a Central Control Building at Ompora, Budgam. Disputes arose due to alleged delays and termination of the contract by ERA, leading the petitioner to seek arbitration under Section 11(6) of the Arbitration and Conciliation Act, 1996.
ERA contested the petition, arguing the petitioner failed to follow the agreed procedure of referring disputes to an Adjudicator/Dispute Review Expert (DRE) before seeking arbitration. However, Justice Sanjay Dhar ruled in favor of the petitioner, stating the arbitration clause had a wide scope and that the absence of a pre-arbitration agreement with the Adjudicator/DRE made it impractical for the petitioner to pursue that route.
The court highlighted the principle of favoring arbitration to resolve disputes, as established in previous judgments by the Supreme Court and Bombay High Court. Consequently, Hon'ble Mr. Justice Ali Mohammad Magrey, former Chief Justice of the High Court of J&K and Ladakh, has been appointed as the Sole Arbitrator to resolve the disputes arising from the contract.
The judgment reinforces the judiciary's inclination towards arbitration as a means to alleviate the burden on courts, ensuring that even in the presence of procedural complexities, the core arbitration agreement between parties is honored.
Bottom line:-
Arbitration Clause - Arbitration agreement upheld despite non-compliance with pre-arbitration procedures - Arbitrator appointed to adjudicate disputes arising out of construction contract.
Statutory provision(s):
Arbitration and Conciliation Act, 1996 Sections 11(6), 16.
