Manish Gunwani vs Lehman Brother Securities Pvt. Ltd.

Dr. D.Y. Chandrachud, J.—The arbitration agreement is contained in a contract of 14 August 2007 between the applicant and the respondent. The arbitration clause reads as follows :

The terms and conditions of this contract of employment shall be governed and interpreted according to the laws of India. Any dispute, controversy or claim arising out of or in connection with this contract of employment shall be resolved by binding, final arbitration in Mumbai, pursuant to the Rules of Arbitration of the International Chamber of Commerce. The language of the arbitration shall be English.

The applicant has moved this Court in proceedings u/s 11(6) of the Arbitration and Conciliation Act, 1996 after addressing a letter dated 3 November 2011 to the respondent invoking arbitration. As a matter of fact, from the affidavit-in-reply that has been filed by the respondent, it is evident that earlier, by a letter of 16 February 2010, the applicant had invoked arbitration. In a reply dated 19 March 2010, the respondent had drawn the attention of the applicant to the arbitration clause agreed upon between the parties under which the arbitration was to be governed by the Rules of Arbitration of the International Chamber of Commerce (`ICC''). The respondent accordingly stated that it would respond to a request as defined in the ICC Rules. Both the earlier letter dated 16 February 2010 and the response dated 19 March 2010 have been suppressed from the arbitration application.

Where a procedure has been agreed upon between the parties to an arbitration agreement, recourse can be taken to the provisions of Section 11(6) only where : (a) a party fails to act as required under that procedure; or (b) the parties or the two appointed arbitrators fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure. The Iron and Steel Company Limited Vs. Tiwari Road Lines, , an application was moved u/s 11(6) without first taking recourse to the agreed procedure under the arbitration agreement which envisaged an arbitration under the rules of the Indian Council of Arbitration. The Supreme Court held that since the parties had agreed on a procedure for appointing an arbitrator for settling the disputes by arbitration and there was no allegation that any of the contingencies enumerated in clauses (a), (b) or (c) of sub-section 6 of Section 11 had arisen, the arbitration application was not maintainable.

In the present case, the applicant''s advocate addressed a communication on 2 March 2012 to the ICC referring to the arbitration clause and inquiring where in Mumbai the ICC could be approached for arbitration. The ICC in its reply dated 2 March 2012 stated that since the place of arbitration is Mumbai, a request for arbitration would have to be made to its office at Hongkong.

Since the parties have agreed to a procedure for arbitration, it is necessary that the applicant should take recourse to that procedure. It is not the case of the applicant that the ICC has failed to act or to perform any function entrusted to it under the agreed procedure. In that view of the matter, having regard to the law laid down by the Supreme Court in the judgment noted above, it would not be appropriate to entertain the arbitration application at this stage. The applicant would be at liberty to take recourse to the agreed procedure by moving the ICC with an appropriate request for arbitration in accordance with its rules. The Arbitration Application is accordingly dismissed.