Holding that an expert is different from an arbitrartor and that order passed by an expert cannot be termed as an award of an arbitrator, the Delhi High Court in a recently reported decision [Joint Investments Pvt. Ltd. v. Escorts, (2010) 170 DLT 487] has declared that the process by which a decision was arrived at by an expert could not be termed as one arising out of an arbitral tribunal and thus did not have the legal implications as that of an award by the arbitrator.
The High Court inter alia observed as under;
13. According to Mr. Wadhwa, reference could not be treated as an expert determination as expert determination had already been done by the Actuary, which was still disputed by the parties and reference was not for avoidance of disputes but rather for resolution of disputes. He also placed reliance upon GIL's letter dated 3rd December, 2003 in which GIL had asked Mr. Malegam to adjudicate the disputes and render an award. Consequently, according to Mr. Wadhwa, the parties themselves understood the process to be an arbitration process.
14. Mr. Wadhwa also submitted that the Supreme Court in K.K. Modi's case (supra) was distinguishable on facts as in that case all disputes between the parties had been settled much prior in time and the CMD, IFCI was only to implement the decision arrived at between the parties. He further pointed out that Clause 9 of Memorandum of Understanding executed by the Modi family members entitled CMD, IFCI to even nominate another person for deciding any dispute with regard to implementation. Mr. Wadhwa lastly submitted that when the word 'decision' is used, it subsumes adjudication of all disputes by an arbitrator.
15. Having heard the parties, I am of the opinion that the role of an arbitrator and an expert is different. If a person is appointed, owing to his skill and knowledge of a particular subject, to decide any questions, whether of fact or of value, by the use of his skill and knowledge and without taking any evidence or hearing the parties, he is not, prima facie, an arbitrator. If, on the other hand, a person is appointed with the intention that he should hear the parties and their evidence and decide in a judicial manner, then he is an arbitrator, although mere absence of a hearing, provided it does not result in any unfairness to the parties, will not necessarily invalidate an award. Obviously this must depend on the intention of the parties, subject-matter of the dispute and the terms of any written pleadings or submissions to the arbitrator.
16. In fact, according to Russell, an arbitrator's task is to determine disputes referred to him on the basis of evidence and submissions before him according to the law chosen by the parties or other considerations agreed by them or determined by him, but within the general obligation of an impartial fair resolution without unnecessary delay or expense. The most significant distinction between an arbitrator and an expert is that, an expert need not act judicially. This has two effects, namely, an expert can apply his own expertise to decide the question referred and further the expert is not bound to give each party an opportunity to put its case and to deal with other material. (See paras 4-002 and 4-003 of Russell on Arbitration, 22nd Edition.)
17. Even though the judgment in K.K. Modi's case (supra) is distinguishable on facts, the test to determine whether an impugned decision is an expert's decision or an arbitrator's award, has been clearly spelt out therein. Some of the relevant observations of the Supreme Court in the said judgment are reproduced hereinbelow:-
“17. Among the attributes which must be present for an agreement to be considered as an arbitration agreement are: (1) The arbitration agreement must contemplate that the decision of the tribunal will be binding on the parties to the agreement, (2) that the jurisdiction of the tribunal to decide the rights of parties must derive either from the consent of the parties or from an order of the court or from a statute, the terms of which make it clear that the process is to be an arbitration, (3) the agreement must contemplate that substantive rights of parties will be determined by the agreed tribunal, (4) that the tribunal will determine the rights of the parties in an impartial and judicial manner with the tribunal owing an equal obligation of fairness towards both sides, (5) that the agreement of the parties to refer their disputes to the decision of the tribunal must be intended to be enforceable in law and lastly, (6) the agreement must contemplate that the tribunal will make a decision upon a dispute which is already formulated at the time when a reference is made to the tribunal. xxx xxx xxx xxx 19. In Russell on Arbitration, 21st Edn., at p. 37, para 2-014, the question how to distinguish between an expert determination and arbitration, has been examined. It is stated,
“Many cases have been fought over whether a contract‟s chosen form of dispute resolution is expert determination or arbitration. This is a matter of construction of the contract, which involves an objective enquiry into the intentions of the parties. First, there are the express words of the disputes clause. If specific words such as „arbitrator' 'arbitral tribunal', 'arbitration' or the formula 'as an expert and not as an arbitrator' are used to describe the manner in which the dispute resolver is to act, they are likely to be persuasive although not always conclusive.... Where there is no express wording, the court will refer to certain guidelines. Of these, the most important used to be, whether there was an 'issue' between the parties such as the value of an asset on which they had not taken defined positions, in which case the procedure was held to be expert determination; or a 'formulated dispute' between the parties where defined positions had been taken, in which case the procedure was held to be an arbitration. This imprecise concept is still being relied on. It is unsatisfactory because some parties to contract deliberately choose expert determination for dispute resolution. The next guideline is the judicial function of an arbitral tribunal as opposed to the expertise of the expert;.... An arbitral tribunal arrives at its decision on the evidence and submissions of the parties and must apply the law or if the parties agree, on other consideration; an expert, unless it is agreed otherwise, makes his own enquiries, applies his own expertise and decides on his own expert opinion....” 20. The authorities thus seem to agree that while there are no conclusive tests, by and large, one can follow a set of guidelines in deciding whether the agreement is to refer an issue to an expert or whether the parties have agreed to resolve disputes through arbitration. 21. Therefore our courts have laid emphasis on (1) existence of disputes as against intention to avoid future disputes; (2) the tribunal or forum so chosen is intended to act judicially after taking into account relevant evidence before it and the submissions made by the parties before it; and (3) the decision is intended to bind the parties. Nomenclature used by the parties may not be conclusive. One must examine the true intent and purport of the agreement. There are, of course, the statutory requirements of a written agreement, existing or future disputes and an intention to refer them to arbitration. (Vide Section 2 Arbitration Act, 1940 and Section 7 Arbitration and Conciliation Act, 1996.)”
No comments:
Post a Comment