Delhi High Court Clarifies Arbitrator Appointment in Time-Barred Claims!

Delhi High Court Clarifies Arbitrator Appointment in Time-Barred Claims!

Posted on: Jul 15, 2024

Delhi High Court Clarifies Arbitrator Appointment in Time-Barred Claims!

In a recent decision, the Delhi High Court, presided by Justice Anup Jairam Bhambhani, emphasized that the determination of whether arbitration claims are time-barred should ideally be left to the arbitral tribunal. This was highlighted in the case where Capri Global Capital Limited (Petitioner) filed a petition under Section 11 of the Arbitration & Conciliation Act, 1996, seeking the appointment of a sole arbitrator to resolve disputes with Ms. Kiran (the respondent) arising from a facility agreement.

Case Background:

Capri Global Capital Limited sought arbitration as per the agreement's clause 13.15, which mandated arbitration in Mumbai or Delhi, chosen by the lender. The arbitration clause allowed the lender to nominate a sole arbitrator, a provision rendered invalid by the Supreme Court in Perkins Eastman Architects DPC & Anr. vs. HSCC (India) Ltd.

The Petitioner issued an initial Invocation Notice to commence arbitration, which was contested by the Respondent for not detailing the Petitioner’s claims, as required under Section 21 of the Arbitration Act. The initial arbitration led to an ex-parte award, later set aside by the District Judge, Saket, due to the unilateral appointment of the arbitrator by the Petitioner. Following this, the Petitioner issued a new Invocation Notice, which the Respondent argued was invalid as the claim was time-barred based on defects in the initial notice. 

Court Observations:

The High Court referred to Section 43(4) of the Arbitration Act, which excludes the period from the commencement of arbitration to the date an arbitral award is set aside when computing the limitation period for initiating arbitration proceedings. The Court emphasized that such complex issues of limitation should not be summarily decided in Section 11 proceedings but should be thoroughly examined by the arbitral tribunal.

The High Court confirmed the existence of a valid arbitration agreement between the parties and appointed Mr. Amer Vaid, Advocate, as the Sole Arbitrator to adjudicate the disputes.

Case Title: Capri Global Capital Limited Vs Ms Kiran

Case Number: ARB.P. 870/2023 and I.A. 16066/2023

Date of Judgment: May 21, 2024