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India – Short Note On The Case Camco v. Intamex, CS(OS) 2349/2010.

18 February, 2015

 


Rajani, Singhania and Partners successfully represented Intamex S.A, a Company incorporated in Switzerland before the Hon’ble Delhi High Court in a civil suit filed by Camco Multi Metal Ltd. The civil suit was filed by Camco for recovery of Rs.74,32,700/- against Intamex on the basis of purchase contract entered between the parties for supply of non-ferrous goods. The parties had entered into two contracts for this transaction through exchange of correspondences.

The factual background of the case was that Camco submitted its offer to Intamex for supply of ferrous goods. Intamex accepted the offers, vide, sales confirmation which was signed by both the parties and the contract was concluded. The sales confirmation contained an arbitration clause which provided that differences and disputes arising from the Contract were to be subject to the rules and regulations of London Metal Exchange and submitted to it in London. Thereafter, Camco issued Purchase Contract in which it unilaterally inserted a clause conferring jurisdiction upon the Courts in Delhi. The said purchase contract was not signed by Intamex.

Intamex filed an application under Section 8 of the Arbitration and Conciliation Act, 1996 challenging the maintainability of the suit in view of the arbitration clause. Reliance was placed by Intamex on the judgment of “Bhatia International v. Bulk Trading SA”. The application was challenged by Camco on the ground that Part-I of the Arbitration and Conciliation Act, 1996 is not applicable to cases of international commercial arbitration. During the pendency of the matter, the case of Bhatia International was overruled by the Hon’ble Supreme Court in the case of BALCO v. Kaiser on 06.09.2012. Intamex filed another application under Section 45 of Arbitration and Conciliation Act, 1996 and withdrew the Section 8 application filed earlier.

The issue for consideration of the High Court was regarding the validity of the arbitration clause. Camco argued that the arbitration agreement between the parties is invalid for the reason that the purchase contract issued by Camco amounts to final understanding on dispute resolution between the parties. Camco further contended that the sales confirmations issued by Intamex were signed subject to the terms of the purchase contract by Camco. Intamex rebutted that the sales confirmation denote the final understanding between the parties, and contended that the Court could scrutinize the arbitration agreement under Section 45 of the Arbitration and Conciliation Act, 1996 only under limited grounds.

The High Court held that the arbitration agreement referred to in the sales confirmation denoted the final understanding between the parties as it was signed by both the parties and subsequently acted upon. The arbitration agreement was a separate agreement from the main contract and, therefore, the change in the arbitration agreement, if any, was to be specifically accepted by the parties. It was further held that the Court was seized of the application under Section 45 of Arbitration and Conciliation Act, 1996 and had to adjudicate upon the invalidity of the agreement, in case the issue was raised before the Court prior to referring to the Arbitral Tribunal. The Court held that once the Court found that agreement was valid, it was equally obligatory for the Court to stay the suit by exercise of inherent powers and pass appropriate orders as to reference of dispute to arbitration. The grounds raised by Camco to dispute the validity of the arbitration agreement were untenable. Hence, the parties were directed to take necessary steps to appoint the Arbitral Tribunal.
 
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For further information, please contact:
 
Madhu Sweta, Partner, Rajani Singhania & Partners

Saurabh Bindal, Rajani Singhania & Partners

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