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 Government of India has proposed many amendments to the Arbitration and conciliation Act 1996 as per Consultation Paper prepared by its Ministry of Law and Justice. Law Commission of India had recommended comprehensive review of the Act in its 176^th report in 2001. Arbitration Amendment Bill, 2003 was introduced in Parliament of India but same was withdrawn subsequently because many provisions of the Bill were contentious and it was decided that new legislation will be brought in parliament of India after undertaking an in-depth examination of various suggestions and recommendations.

In the meantime, the Supreme Court of India and many of its High Courts had pointed out some lacunas in the Act. Government of India has decided to have consultations for amendment of the Act as it has become necessary to remove difficulties and lacunas in the Act. It has started the process of amending the Act. Experts may send their suggestions. Following sections are proposed to be amended:

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Arbitration and Conciliation Act, 1996 — Section 11(6) — application under — for appointment of arbitrator — applicant entered into agreement with the respondent to carry out drilling operations in the offshore waters as allocated by the respondent — non-payment/part-payment of the invoices by the respondent — appellant addressed a notice to the respondent to invoke arbitration clause to which the respondent not responded — hence this petition — held that arbitration clause 28 of the agreement cannot be said to be a one time measure and it cannot be held that once the arbitration clause is invoked the remedy of arbitration is no longer available in regard to other disputes that might arise in future — this Court appointed the former judge of this Court as arbitrator on behalf of the respondent to decide the matter — petition disposed — no cost.

Supreme Court of India

ARBITRATION PETITION NO. 21 of 2009

Judge(s): AFTAB ALAM

Date of Judgment: Wednesday, February 17, 2010

DOLPHIN DRILLING LTD.  Versus  OIL AND NATURAL GAS CORPORATION LTD.

O R D E R

AFTAB ALAM, J

1. This is an application under Section 11(6) of the Arbitration and Conciliation Act, 1996 for appointment of an arbitrator for and on behalf of the respondent and to refer the dispute(s) between the parties for arbitration. The applicant and the respondent entered into an agreement dated October 17, 2003 for “Charter Hire of Deepwater Drilling Rig DP-Drill Ship `Belford Dolphin’ along with Services on Integrated Basis”. In terms of the agreement, the applicant was to carry out drilling operations for the respondent in the offshore waters of India as allocated by the respondent. Clause 28 of the agreement contained the arbitration clause. According to the applicant, though the period of the agreement came to an end on February 13, 2007, on being called upon by the respondent, it continued to provide further services till April 10, 2007 for which it was entitled to be paid additionally on comparable rates under the agreement.

2. The applicant makes the grievance that a number of its invoices were not paid or only paid in part by the respondent and on demands made by it the respondent did not even give any satisfactory reply for non-payment/part-payment of those invoices. Failing to get any positive response from the respondent despite demands and reminders, the applicant was left with no option but to invoke the arbitration clause under the agreement. It accordingly, addressed a notice to the respondent on January 29, 2008 invoking arbitration on the disputes broadly set-out in the notice and nominating Mr. Justice S. P. Bharucha, a former Chief Justice of India, as its arbitrator. The applicant further states that the respondent did not respond to the arbitration notice in the manner as provided in the arbitration clause in the agreement and hence, it was forced to move this application before the court.

3. Mr. Gaurav Agrawal, learned counsel appearing for the respondent, accepted the provision for arbitration vide clause 28 of the agreement dated October 17, 2003. He also acknowledged that the dispute(s) raised by the applicant in the arbitration notice dated January 29, 2008 arose under the agreement dated October 17, 2003 and was/were fully arbitrable. Nevertheless, he resisted the applicant’s prayer to refer the dispute(s) raised in the arbitration notice dated January 29, 2008 to arbitration on the plea that the applicant had already invoked the arbitration clause albeit in connection with a different dispute earlier arising under the agreement.

4. Mr. Agrawal submitted that the remedy of arbitration under clause 28 of the agreement was a one-time measure and it could not be taken recourse to repeatedly even though the disputes may be different and unconnected to each other. Learned counsel further submitted that the arbitration was an expensive proposition and even though the respondent was liable to bear only half of the expenses, the financial burden cast by the arbitration proceedings in terms of fees for the learned arbitrators and counsel/solicitors and other incidental expenses was quite onerous. Hence, the arbitration clause in the agreement envisaged one, single arbitration for all disputes between the parties and not repeated arbitrations for different disputes arising between the parties at different times under the same agreement. The gist of the respondent’s objection is contained in sub-paragraphs (d) and (e) of paragraph 4 of its counter affidavit which are reproduced below:

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