- Bookmark
- Share
- CaseIQ
Nussli (Switzerland) Limited v. Commonwealth Games 2010 Organising Committee .
Factual and Procedural Background
The dispute concerns contracts executed in connection with various projects undertaken before, during, and after the Commonwealth Games 2010. The petitioner had earlier approached the Delhi High Court under Section 9 of the Arbitration and Conciliation Act, 1996, seeking interim relief (OMP No. 481 of 2011). On 7 December 2011, that court passed an agreed order maintaining an interim injunction that restrained Respondent 2 from remitting payment to Respondent 1, subject to the petitioner keeping a bank guarantee alive and pursuing interim relief before an arbitral tribunal.
In the present proceedings, the parties appeared before the court through learned senior counsel. Both sides ultimately agreed that all disputes should be referred to arbitration, prompting the court to determine whether a reference should be made and, if so, how the arbitral tribunal should be constituted.
Legal Issues Presented
- Whether the disputes arising out of the contract should be referred to arbitration in light of the parties’ prior agreed order and the pending investigation by the Central Bureau of Investigation (CBI).
- If a reference is appropriate, how the arbitral tribunal should be constituted and what powers it should possess regarding allegations of bribery and contractual invalidity.
Arguments of the Parties
Petitioner's Arguments
- Consented to the continuation of the interim order passed on 29 June 2011, provided the bank guarantee remains alive.
- Requested that the matter be disposed of by referring the disputes to arbitration, consistent with the earlier agreed directions.
Respondent's Arguments
- Acknowledged that the matter should be referred to arbitration but highlighted that serious issues under investigation by the CBI could lead to a finding that the contract is void ab initio.
- Despite these concerns, stated there would be no impediment to the arbitral tribunal examining all allegations, including those under CBI investigation.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Nussli (Switzerland) Ltd. v. Commonwealth Games 2010 Organising Committee, OMP No. 481 of 2011 (Delhi HC) | Agreed interim directions restraining payment, subject to the petitioner keeping the bank guarantee alive and pursuing interim relief before an arbitrator. | Formed the procedural foundation for the present order; the court continued to rely on those agreed directions while deciding to refer the dispute to arbitration. |
Court's Reasoning and Analysis
1. The court examined the pleadings and concluded that the issues affect numerous parties involved in Commonwealth Games projects, emphasizing the need for a swift and specialised dispute-resolution mechanism.
2. Both parties expressly agreed that arbitration was the appropriate forum. The only hesitation raised concerned the ongoing CBI investigation into alleged bribery and possible contractual invalidity. The court held that, consistent with established legal principles in domestic and international arbitration, such allegations do not bar arbitration; the arbitral tribunal can adjudicate them.
3. Finding no reason to prolong judicial proceedings, the court decided that the interests of justice would best be served by a reference to arbitration, allowing the parties to submit comprehensive claims and defences beyond what had been pleaded in the petition.
4. Because the factual and legal questions are complex and carry potential international repercussions, the court determined that an arbitral tribunal composed of experienced former Supreme Court judges would ensure competence and neutrality.
5. Accordingly, the court nominated Hon’ble Mr. Justice Kuldeep Singh (Retd.) as Chairman and Hon’ble Mr. Justice B. P. Singh (Retd.) and Hon’ble Mr. Justice R. V. Raveendran (Retd.) as co-arbitrators, granting them freedom to set their remuneration, choose convenient sittings, and decide all issues—including allegations of bribery—without restriction.
Holding and Implications
DISPOSED OF. The arbitration petition is allowed to the extent that all disputes between the parties are referred to the newly constituted three-member Arbitral Tribunal composed of former Supreme Court judges. The Registry is directed to communicate the order so the tribunal may enter upon reference expeditiously; no costs are awarded.
Implications: The parties must now pursue their claims before the Arbitral Tribunal, which is empowered to examine every issue, including those under CBI investigation. The decision facilitates expedited and expert adjudication but sets no new binding precedent beyond reinforcing the court’s pro-arbitration stance.
Order
1. I have heard the learned Senior Counsel for the parties.
2. A bare perusal of the pleadings would indicate that the issues raised herein are of significance to a large number of parties who were participants in the execution of various projects either prior to, during or after the Commonwealth Games, 2010. It appears that the matter has already been brought before the Court in a petition under Section 9 of the Arbitration and Conciliation Act, 1996 at the instance of the petitioner.
3. It also becomes apparent from the perusal of the record that an agreed order has been passed between the parties in the aforesaid proceedings on 7-12-2011 OMP No. 481 of 2011 by the High Court of Delhi, which reads as under:
“1. This is a petition under Section 9 of the Arbitration and Conciliation Act, 1996 for interim relief. On 29-6-2011 OMP No. 481 of 2011 while issuing notice in the matter, this Court has passed the following order:
In the meantime, Respondent 2 will not remit the payment to Respondent 1, if not already done till the next date of hearing.
2. The counsel for the petitioner submits that the petitioner has filed a petition under Sections 11(6) and 12(3) of the Arbitration and Conciliation Act, before the Supreme Court of India, in which notice has been issued. This fact is not disputed by the counsel for the respondent who submits that time has been granted to the respondent to file their reply.
3. The counsel for the parties submit that this petition may be disposed of with the following directions:
(i) The interim order dated 29-6-2011 OMP No. 481 of 2011 shall continue, subject to the condition that the petitioner will keep the bank guarantee alive, till further orders to be passed by the arbitrator.
(ii) The petitioner will file an application under Section 17 of the Arbitration and Conciliation Act, 1996 before the arbitrator, within two weeks of the arbitrator entering upon reference.
(iii) Both the parties will request the arbitrator, to hear the application for interim relief, at the first instance.
4. In view of the above agreed directions, the petition stands disposed of.
IAs Nos. 10147 and 10148 of 2011
5. In view of the order passed in Nussli (Switzerland) Ltd. v. Commonwealth Games 2010 Organising Committee OMP No. 481 of 2011, the applications stand dismissed.”
4. In view of the aforesaid order, the learned Senior Counsel for both the parties have agreed that the matter ought to be referred to arbitration. However, Mr Gopal Subramonium, learned Senior Counsel appearing for the respondent, submits that serious issues would arise which are currently under investigation of CBI, which may ultimately culminate into certain conclusions which could result in the invalidation of the contract from inception. He has, however, very fairly stated that there would be no impediment for the Arbitral Tribunal to look into all the issues including the allegations which are pending with CBI in investigation.
5. I am of the opinion that the submission made by the learned Senior Counsel is in accordance with the law settled, not only by this Court, but in other jurisdictions also concerning international commercial arbitrations.
6. In view of the above, I see no reason to continue any further hearing in this matter. It would be in the interests of justice to refer all the disputes arising between the parties in relation to the contract to the Arbitral Tribunal. The parties are entitled to submit their respective claims before the Arbitral Tribunal, which need not be limited to the submissions made by the parties in the present petition.
7. Since the factual and legal questions raised herein are complex and are also likely to have international repercussions, it would be appropriate to constitute the Arbitral Tribunal consisting of former Judges of this Court. In view of the above, I hereby nominate Hon'ble Mr Justice Kuldeep Singh (Retd.) as Chairman, Hon'ble Mr Justice B.P Singh (Retd.) and Hon'ble Mr Justice R.V Raveendran (Retd.) as the arbitrators.
8. The Arbitral Tribunal shall be at liberty to fix its own remuneration at its discretion. The venue of the arbitration, according to the agreement, is Delhi, however, the arbitrators shall be at liberty to hold the meetings of the arbitration at any convenient place.
9. It is made clear that the Arbitral Tribunal shall be at liberty to adjudicate on all the issues raised by the respective parties including the allegations with regard to bribery, etc. being investigated by CBI.
10. The Registry is directed to communicate this order to the Chairman and the arbitrators, so that the Arbitral Tribunal can enter upon reference as expeditiously as possible.
11. The arbitration petition is, accordingly, disposed of. No order as to costs.
Alert