Arbitration is seen as the panacea for the woes of litigation. However, it is becoming increasingly challenging, it is more complex, and there are several reasons for long delays, challenges in enforcement, high costs, etc. Another reason for the complexity is multiplicity- multiple invocations, multiple references, multiple arbitral tribunals, multiple awards, and multiple challenges between the same parties, in respect of the same contract or the same series of contracts.
It is noted by the Indian Courts that single arbitration can be pursued in cases when the following criteria are met-
- Same parties and similar nature of disputes under both tenders.
- The dispute is governed by similar tenders.
- Convenient for both parties in terms of time and cost savings.
In the case of Gammon India Ltd. v. NHAI, 2020, the Delhi High Court noted that Multiple invocations and multiple arbitral tribunals disturb the very essence of arbitration. Further, allowing the party to pursue single arbitration prevents the likelihood of separate decisions in similar claims before different tribunals in the interest of public policy.
In this case, during the execution of the project, disputes had arisen between the parties in respect of some claims so the Court considered the legal position on multiple arbitrations and multiple awards.
Court noted that a perusal of the provisions of the Arbitration and Conciliation Act, 1996 shows that the statute envisages that disputes can be raised at different stages and there can be multiple arbitrations in respect of a single contract. However, the court notes that multiplicity should be avoided. The intention of avoiding multiplicity is clear from the principles enshrined in Order 2 Rule 2 CPC, Section 10 CPC, and Res Judicata are part of the Code of Civil Procedure from times immemorial.
Having multiple arbitrations before several arbitral tribunals leads to enormous confusion and defeat the purpose of arbitration as a speedy mean of resolution of disputes. Hence, the constitution of multiple tribunals is inherently counter-productive.
Court noted that in construction contracts, the claims may be multiple in number but the underlying disputes about breach, delays, termination, etc., would form the core of the disputes for almost all claims.
Further, it noted that multiple arbitrations can be of various categories:
- Arbitrations and proceedings between the same parties under the same contract.
- Arbitrations and proceedings between the same parties arise from a set of contracts constituting one series, which bind them in a single legal relationship.
- Arbitrations and proceedings arise out of identical or similar contracts between one set of entities, wherein the other entity is common.
In Category (i) cases seeking a second reference under Section 11 of the Arbitration and Conciliation Act, 1996 for adjudication of disputes, the Supreme Court and High Courts have referred disputes between the same parties arising under the same contract, to arbitration.
In a set of petitions involving several caterers and the Indian Railway Catering & Tourism Corporation Limited (IRCTC cases) involving 25 petitions which fell in category (iii) above, the Delhi High Court recently appointed a single arbitrator to adjudicate the disputes.
CONCLUSION
So, in a case, a dispute has been referred by Party A against Party B to an arbitral tribunal, and subsequently, a dispute of similar nature arises then ideally it should be referred to the same arbitral tribunal. The Delhi High Court noted that “If an Arbitral Tribunal is constituted for adjudicating some disputes under a particular contract or a series thereof, any further disputes which arise in respect of the same contract or the same series of contracts, ought to ordinarily be referred to the same Tribunal. The Arbitral Tribunal may pronounce separate awards in respect of the multiple references, however, since the Tribunal would be the same, the possibility of contradictory and irreconcilable findings would be avoided.”
Further, Section 16 of the Arbitration and Conciliation Act, 1996 provides ‘kompetenz kompetenz’ which entails that the tribunal is free to decide on the scope of its competence to adjudicate a dispute brought before it. So, parties can combine the disputes and submit them to the tribunal for faster adjudication as per the governing law and contract between the parties.
