Holding

A petition under Section 11(5) is not maintainable where the parties have agreed on a specific ICC procedure for appointing an arbitrator, and the applicant must first follow that agreed procedure.

Summary

Standard Corrosion Controls Pvt Ltd (Indian) and SARKU Engineering Services Sdn Bhd (Malaysian) entered a contract for painting works. The contract contained Article X, which required any dispute to be settled by mutual consultation and, failing that, by arbitration in Mumbai under the International Chamber of Commerce (ICC) Rules with a sole arbitrator. After the respondent suspended the contract, the applicant sought appointment of an arbitrator by filing an application under Section 11(5) of the Arbitration and Conciliation Act, 1996, because the respondent did not provide a list of arbitrators. The respondent argued that the parties had agreed to follow the ICC procedure, which mandates a request to the ICC Secretariat before any court intervention. The Supreme Court held that the parties’ contractual agreement on the appointment procedure is binding and that a petition under Section 11(5) is not maintainable when such an agreement exists; the applicant must first approach the ICC Secretariat. Consequently, the application for appointment of an arbitrator was dismissed.

Issues considered

Whether a petition under Section 11(5) of the Arbitration and Conciliation Act, 1996 is maintainable when the parties have contractually agreed on a specific procedure for appointing an arbitrator under the ICC Rules.
Whether the court can appoint an arbitrator notwithstanding the parties' agreement to approach the ICC Secretariat for arbitration.
Whether the ICC Rules can be overridden by the statutory provisions of the Arbitration and Conciliation Act.

Legislation cited

Arbitration and Conciliation Act, 1996s. 11(2), s. 11(5), s. 11(6)

Subjects

ArbitrationSection 11Appointment of arbitratorICC Arbitration RulesContractual arbitration clauseSupreme Court jurisdictionForeign contract

Judgment

[2008] 15 $.C.R. 1051

,.._
STANDARD CORROSION CONTROLS PVT. LTD. A
v.
SARKU ENGINEERING SERVICES SON BHD
(Arbitration Application No. 6 of 2008)

NOVEMBER 11, 2008
B
[MARKANDEY KATJU, J.]

>-
Arbitration and Conciliation Act, 1996; S. 11 (5):

Appointment of Arbitrator - Agreement entered into c
between Indian company and foreign company for painting
workscope package - Termination of contract by foreign
company - Dispute - Invoking of arbitration clause by Indian
company asking foreign company to select an Arbitrator -
Foreign company refusing to select - Application for D
appointment of Arbitrator before Supreme Court ·- Held: In
terms of agreement, applicant-Indian company, to apply to
ICC for appointment of an Arbitrator in accordance with
Arbitration Rules of International Chambers of Commerce -
Hence, application not maintainable.
E
S. 11 (2), (5) and (6) of 1996 Act - Appointment of an
Arbitrator - Procedure for.

Applicant, an Indian company, entered into an
agreement with a foreign company, respondent, for F
painting workscope package. Respondent suspended
the contract for not furnishing requisite bank guarantee.
This had resulted in a dispute between the parties. The
applicant called upon the respondent to send a list of
eminent persons for appointment of sole Arbitrator. When
the respondent did not respond, applicant himself had G
....(
sent a list of persons to respondent for appointment of
..... an Arbitrator. In response, respondent stated that the
matter could be settled by mutual consent, failing which

1051 H
1052 SUPREME COURT REPORTS [2008] 15 S.C.R.

A arbitration could be held at Mumbai by applying the Rules
of International ·Chambers of Commerce. Hence, the
present application filed by the applicant u/s. 11 (5) of the
Act. .

Applicant submitted that the Arbitration Rules of the
8
International Chambers of Commerce (ICC) cannot
prevail over the Arbitration and Conciliation Act, 1996.
v
......_ '\
Dismissing ·the application, the Court

C tiELD: 1.1. It is true that a statute overrides the r
r
contract, but it has to. be noticed that Section 11 (2) of the I-
I
Arbitration and Conciliation Act states that subject to sub-
,_
section (6), the parties are free to agree on a pro.cedure ·
Jor appointing the arbitrator or.arbitrators. Admittedly, the
conditions mentioned in'sub ..section (6) of Section 11 are
D not attracted in this case. Hence, the procedur~ to appoin·t · ·
an arbitrator agreed upon by the parties will be applicable.. .
[Para 10][105.6-A;.Cl · ·· · · ·
. I

1.2. The scheme ofthe Act is·that under Section 11(2)
E of the Act, the. parties are free to agree on a procedure
for. appointing. an Arbitrator subject to the provisions of
· Section 11 (6). A petition under Section 11 (5) of the Act
would not lie if there is any agreement between the
pa.rties providing for the procedure for appointment of an
F arbitrator. In the present case, Article X of the agreement
provides for such procedure. [Para 13] [1056-G-H; 1057-
A]
2. The parties had agreed that any dispute between
them shall be settled as far as possible by mutual
G consultation and consent, failing which by arbitration to
be held at Mumbai applying the Arbitration Rules of the
ICC. The applicant has to apply to the Secretariat of the
ICC; as mentioned in the Arbitration Rules of the ICC, and
it cannot approach this Court for appointment of an
I-
H Arbitrator. No doubt, the arbitration will have to be held t
•·
I
STANDARD CORROSION CONTROLS PVT.LTD~ v. SARKU 1053
ENGINEERING SERVICESSDN BHD
~-

at Mumbai, but the entire procedure of appointment of the A
Arbitrator has to be in accordance with the Arbitration
Rules of the ICC, which requires that first a request has
to be made to the Secretariat of the ICC. Admittedly, the
applicant has not approached the ICC Secretariat. Hence,
the application filed by the applicant is not maintainable B
at all. [Para 11] (1056-C-E]
_...._
Iron & Steel Co. Ltd. vs. Tiwari Road Lines (2007) 5 SCC
703 and Rite Approach Group Ltd. vs. Rosoboronexport,
(2006) 1 sec 206, relied on.
c
CIVIL ORIGINAL JURISDICTION : Arbitration Application
No. 6 of 2008.

Anurag Kumar, P.N. Kumar, Bindra Rana and Meenu
.,_, Sharma·· (for M/s. S.S. Rana & Co.) for the Applicant. D

/.
Kavin Gulati, Rashmi Singh, Avinash Pandey and T.
Mahipal for the Respondent.
The Judgment of the Court was delivered by
E
MARKANDEY KATJU, J. 1. By means of this Arbitration
Application the applicant has prayed for appointment of an
.arbitrator under Section 11 (5) of the Arbitration and Conciliation
""'f Act, 1996 (hereinafter referred to as the Act) for resolution of
the disputes between the parties arising out of the agreement
F
dated 21.2.2006.

2. Heard learned counsel for the parties and perused the
record.

. 3. The applicant is a company registered under the Indian ·G
Companies Act, having its registered office at Thane,
..... A, Maharashtra. The respondent is a company incorporated under
the law of Malaysia having its registered office at Miri, Sarawak,
Malaysia. The respondent had been awarded a contract of 26
Well Unmanned Platforms by the Oil & Natural Gas Corporation H
1054 SUPREME COURT REPORTS [2008] 15 S.C.R.

.,J..
A (in short · ONGC'). The applicant had been short-listed as one
of the potential sub-contractors for painting workscope
package and was requested to submit its quotations. On going
through the quotation of the applicant, the respondent issued
a contract dated 21.2.2006. Copy of the agreement is at .
B Annexure A-4 to this application.

4. Subsequently, the applicant received a letter dated
...l_
8.9.2006 from the respondent stating that.they had no choice
but to exercise Article VII, the Suspension and Termination·
Clause, of the Contract Agreement with immediate effect on
c the alleged plea that the respondent was unable to furnish bank 1--

guarantee and feedback confirmation of the applicant's f

readiness for work. This resulted in a dispute between the b
parties and the applicant wrote a letter dated 14.4.2007
invoking the arbitration clause in the agreement between the
D parties, being Article X. The applicant called upon the -.,....- .
respondent to send a panel of eminent persons to be selected
to act as a Sole Arbitrator. The applicant also mentioned in the
said letter that in the event the respondent fails to send the list
I
as required by the applicant, the applicant shall approach the ,__
0--

E High Court to appoint the Sole Arbitrator for resolving the
dispute. When the respondent did not send any reply, the
applicant wrote a letter dated 11.10.2007 to the respondent and
had proposed the names of eminent prospective a(bitrators
and asked the respondent to select one of them as the Sole r
F Arbitrator to adjudicate the dispute. The applicant also .
. '
mentioned in the letter dated 11.10.2007 that if the respondent '
fails to do so, the applicant will then approach the Supreme
Court for getting the arbitral forum constituted.

5. The respondent replied by email dated 16.10.2007 and
G
stated that in Article X of the Arbitration it was mentioned tha .
in case of any dispute or difference between the parties >-- .f-
regarding the contract, the matter should be settled, as far as
possible, by mutual consultation and consent, failing which by
arbitration to be held at Mumbai, applying the Arbitration Rules
H
STANDARD CORROSION CONTROLS PVT. LTD. v. SARKU 1055
ENGINEERING SERVICES SON BHD [MARKANDEYKATJU, J.]
~-
of the International Chamber of Commerce (hereinafter referred A
to as the ICC). Article X states as follows:

"Article X Arbitration

Any dispute or difference in view regarding this
CONTRACT shall be settled, in so far as is possible, by Bi
mutual consultation and consent, failing which by arbitration
-~
to be held at Mumbai, India applying the Arbitration Rules
of the International Chamber of Commerce by a single
arbitrator." I

c
6. Since the parties could not agree, the applicant applied
to this Court under Section 11 (5) of the Act for appointment of
an Arbitrator.

7. A counter-affidavit has been filed by the respondent and
D
I have perused the same. The respondent has relied on Article
X of the Agreement dated 21.2.2006 between the parties and
has urged that the arbitration has to be held at Mumbai but by
applying the Arbitration Rules of the ICC. As per the Rules of
Arbitration of ICC, the party who wishes to have recourse to
arbitration under the said Rules is required to request for E
arbitration to the ICC Secretariat. The respondent submitted
that the applicant has not followed that procedure for
appointment of an Arbitrator because it has not submitted any
~ request to the ICC Secretariat. Instead, the applicant has rushed
to this Court without following the procedure mentioned in F
Article X of the Arbitration Agreement.

8. Annexed to the counter-affidavit is the Rules of the ICC
and I have perused the same. Admittedly, the applicant has not
made any request for arbitration to the ICC Secretariat Hence, G
in my opinion, this application is dnot maintainable at all.
--',
" 9. There is no dispute that the applicant had, with open
eyes~ signed the contract dated 21.2.2006, which contains
Article X, quoted above.
H,
.1056 SUPREME COURT REPORTS [2008] 15 S.C.R.

A 10: Learned counsel for the applicant submitted that the -+
Arbitration Rules of the ICC cannot prevail over the
Parliamentary law, which is the Arbitration and Conciliation Act,
1996. In my opinion, it is true that a statute overrides the
contract, but it· has to be noticed that Section 11 (2) of the Act
:s states that subject to sub-section (6), the parties are free to
agree on a procedure for appointing the arbitrator or arbitrators.
Admittedly, the condi~ioris mentioned in sub-section (6) of
Section 11 are not attracted in this case. Henee, the procedure ~-

to appoint an arbitrator agreed upon by. the parties will be
c applicable.
t
11. As already stated above, the parties had agreed that
any dispute between them shall be settled as far as possible
by mutual consultation and consent, failing which by arbitration·
to be held at Mumbai applying the Arbitration Rules of the ICC.
D In my opinion, the applicant has to apply to the Secretariat of .
')>----
the ICC, as mentioned in the Arbi.tration Rules of the ICC, and· .. ,
it cannot approach this CourtJor appointment of an.Arbitrator..
No doubt, the arbitration will hav.e to be held at Mumbai, hut
the entire procedure-of appointm_ent of the Arbitrator has to be
E in accordance with the Arbitration Rules of the ICC, which .···
..
}

requires that first a request has to be made to the.Secretarh~f
of the ICC. Admittedly, the applicant has no approached the
ICC Secretariat. Hence; in my opinion, the application filed by
the applicant herein, is not maintainable at all. · r
F t-
12. This Court in a series of decisions has held that.such
an application/petition without approaching the authority
nominated· and agreed. upon by the parties is not maintainable
vide Iron & Steel Co. Ltd. vs. Tiwari Road Lines 2007(5) SCC
703, Rite Approach Group Ltd. v. Rosoboronexport 2006(1). · ·
G
sec 206. etc.
13. The scheme of the Act is that under Section 11 (2), the -~
...
parties are free to agree on a procedure for appointing an
Arbitrator subject to the provisions of Section 11 (6). A petition
H under Section 11 (5) of the Act would ·not lie if there is any
STANDARD CORROSION CONTROLS PVT. LTD. v. SARKU 1057
ENGINEERING SERVICES SON BHD [MARKANDEY KATJU, J.]

agreement betWeen the parties providing for the procedure for A
appointment of an arbitrator. In the present case there is Article
X of the agreement (quoted above).

14. Learned counsel for the applicant has relied upon
Article IX of the Agreement, which states:
8
"Article IX

This CONTRACT shall be governed by the laws of India.
The CONTRACTOR shall be responsibleto keep itself
informed· and comply with all laws, rules, regulations, c
standards, codes and the like applicable to the .WORKS,
CONTRACTORS and its subcontractors and
CONTRACTOR shall protect, indemnify and hold ONGC;
SARKU, their AFFILIATES and associated companies
and their stockholders, directors, agents, employees, and o
representative of each of the aforementioned parties
harmless from and against all liabilities for any breach
thereof attributable to CONTRACTOR or its
subcontractors."

· 15. In my opinion, Article IX has no relevance to the E
controversy in this case as it only says that the contract shall
be governed by the laws of India. The laws of India would mean
the Contract Act, Limitation Act, Specific Relief Act etc. Article/
Clause IX does not deal with the procedure by which the
arbitrator has to be appointed. That is governed by Clause X. F
16. In view of the above, this Arbitration Application is not
maintainable and it is accordingly dismissed.

S.K.S. Arbitration Application dismissed.