Case: Sime Darby Engineering SDN. BHD Vs. Engineers India Ltd

2. The petitioner is a company incorporated and existing under the laws of Malaysia and is engaged in the business of fabrication of all types of offshore and onshore structures and complexes. The respondent on the other hand is the company incorporated under the (Indian) Companies Act, 1956 and is inter alia engaged in the business of providing engineering and related technical services for petroleum refineries and other industrial projects.3. The necessary facts of the case are that Oil and Natural Gas Corporation Limited (ONGC) invited a tender vide notification dated November 17, 2003 for carrying work of Survey, Design, Engineering, Procurement, Fabrication, Anticorrosion and Weight coating, Laying of submarine pipeline, Installation of SPM, Load out, Tie- down/Sea-fastening and various other jobs in respect of Mumbai High South Field offshore site.4. In connection with the said tender issued by ONGC, respondent and petitioner entered into a Business Agreement on 22/01/2004 by which it was agreed that the respondent shall quote as a bidder against the said Tender with the petitioner as a sub-contractor for identified scope of work. The tender was awarded by ONGC to the respondent by notice dated 10/03/2004 for the said fabrication and installation of D-1 Well-Cum-Water Injection Platform at Mumbai High South field Off-shore site on a turnkey basis for a sum of US $ 62,3000,000/- and thereafter an agreement between the respondent and ONGC was entered into. Then, the respondent entered into a subcontract with the petitioner which was signed on 29th of October 2004 and for Fabrication, Load Out and Transportation of Jacket, Piles, Conductors and Deck for D-1 Well-Cum-Water Injection Platform Project of ONGC at Bombay High South field off-shore site for a lump sum subcontract price of US $ 20,162,460/-. In terms of the said subcontract the petitioner carried out its scope of work in terms of its contractual obligations. As it did not receive the full payment from the respondent disputes and differences between them cropped up. These disputes between the parties remained unresolved despite some joint negotiations between them.5. The petitioner by its Advocates notice on 19/02/2008 invoked the arbitration clause and referred all disputes and differences between them and respondent to arbitration including its claim of US $ 14,244,812.02 and claim for loss and damage on account of financing charges and foreign exchange and such other damages. In the said letter the petitioner also suggested the names of a few arbitrators. The respondent by its letter dated 26/02/2008 did not accept the stand of the petitioner and stated that petitioners stand to proceed with arbitration is premature and the respondent requested the petitioner to withdraw the Notice Invoking Arbitration and come out with a viable proposal to create a joint settlement mechanism to settle the dispute

Court's reasoning:
27. In the instant case Clause 12.2 of the Arbitration clause is silent about the number of arbitrator. Therefore, Section 10(2) of the said Act squarely applies.28. The learned counsel for the respondent has referred to a passage at page 185 paraof Redfern and Hunter, Law and Practice of International Commercial Arbitration, Fourth Edn. But looking at the said book this Court finds that the said passage was not been properly quoted. In paragraphof the said book it has been provided assole arbitrator shall be appointed unless the parties have agreed in writing otherwise, or unless the LCIA Court determines that in view of all the circumstances of the case a29. In the said paragraph it has also been stated that there are distinct advantages of referring a dispute to a sole arbitrator on grounds of speed and economy. "A sole arbitrator does not need to `deliberate with others, without having to spend time in consultation with colleagues in an endeavour to arrive at an agreed or majority determination of the matters in dispute." (Page 184)30. Similar opinion has been expressed in Russell on Arbitration 23rd Edition. At page 129, paragraphwith reference to arbitration it has been said "Where no choice is made, the law implied a reference to a tribunal consisting of a sole arbitrator." In fact Section 15(3) of the (English) Arbitration Act, 1996 provides for the same.31. Mustil and Boyd on Commercial Arbitration, 2nd Edition also contains the same statement of law. At page 174 of the said book it has been provided that "an arbitration agreement calls for a reference to a single arbitrator, either if it contains an express stipulation to that effect, or if it is silent as to the mode of arbitration."32. In the instant case, the arbitration clause 12.2 is silent as to the number of arbitrator. The said clause read with Section 10(2) of the Act makes it very clear that arbitral tribunal in the instant case would be consisting of a sole arbitrator.33.parties.34. The parties autonomy in the arbitration agreement must be given due importance in construing the intention of the parties. In so far as reference to the expression `arbitrator(s) in clause 12.3 is concerned, the same does not in any way affect the intention of the parties in clause 12.2.35. It is noted in this connection that parties have freedom to change the number of arbitrator even after the contract has been entered and by mutual consent the parties may amend the contract. If that takes place, in such an eventuality clause 12.3 provides that the arbitrator or arbitrators have to give reasoned award in respect of each dispute and difference referred. Here also the expression which has been used is `him which also points to a sole arbitrator.36. It is clearly provided in the said Act that an arbitral tribunal can, if necessary, take the help of experts in terms of Section 27 of the said Act. If the sole arbitrator requires the assistance of an expert it can always take such assistance.37. Mr. Mukul Rohtagi, learned counsel for the respondent has fairly submitted that if his argument is not accepted by the Court then his client has no objection to the appointment of Honble Mr. Justice D.P. Wadhwa, a former Judge of this Court, to be the sole arbitrator in this case. The name of Justice Wadhwa also finds place in the list of names suggested by the petitioner. Therefore, appointment of Justice Wadhwa is fairly by consensus.