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Failure to agree
14/03/2006 The Star By BHAG SINGH
Much has been said about arbitration as a means of resolving conflicts.
Except in the case of statutory regulation, the route to arbitration is
adopted through the exercise of the free will of those involved in the
transaction.
Any reference of a disagreement to arbitration has to be by consent of the
parties. The arbitration agreement must be in writing by virtue of the
Arbitration Act 1950.
However, even though a reference to arbitration is the result of a
deliberate choice, it is common for one party to change his/her mind and go
to the normal courts.
If the other party goes along with this, no difficulty arises. But a
confrontation can develop if the other party insists that the agreement to
arbitrate must be honoured.
Here it must be remembered that going to the courts is generally a basic
right of every person. Therefore, the other party cannot ignore the
proceedings in court.
The party who wishes to have the matter arbitrated must move the court not
to proceed by asking it to stay the proceedings. This is provided for in
Section 6 of the Arbitration Act 1952.
It is noted from this provision that notwithstanding the consensual nature
of the arrangement between the parties, the court may exercise its own power
to decide on the remedy.
But of course though the court retains the power to hear the grievance the
courts also regard it as their duty to allow the agreement to take effect.
In this regard the words of Selbourne L.C. in Willesford vs Watson are
relevant. His Lordship said: “If parties choose to determine for themselves
that they will have a domestic forum instead of resorting to ordinary
courts, then, a prima facie duty is cast upon the courts to act on such
agreement.”
Sometimes the party seeking court action may say that there is no dispute at
all to be referred to arbitration and that all that is required for the
court is to grant the relief.
A clear example of this is where there is a claim which is clearly admitted
by the other party so that all that has to be done is for the adjudicator to
grant relief.
Thus in the case of ELF Petroleum SE Asia Pte Ltd vs Winelf Petroleum Sdn
Bhd the court refused to grant a stay because the debt had been admitted and
there was nothing for the arbitrator to decide.
The court adopted what was said by Rowlatt J. in London and North Western
Railway vs Jones as follows:
“It is now quite clear that if there is a difference of any kind arising
under the section before action, that matter must be decided by arbitration
and the courts have no jurisdiction to determine that difference. It does
not, however, follow that the courts cannot be resorted to without previous
recourse to arbitration to enforce a claim which is not disputed but which
the trader merely persists in not paying.”
However, even then sometimes contentions are raised as to whether there is a
dispute leading to a need to examine what the word “dispute” means.
In Gujarat State Co-operative land Development Ltd vs PR Mankad & Anor AIR
the word “dispute” was defined as “a controversy having both positive and
negative aspects. It postulates the assertion of a claim by one party and
its denial by the other.”
Elsewhere it has been said that there is a dispute until the defendant
admits that the sum is due and payable.
It is not necessary for the court to examine the evidence to decide whether
the dispute is genuine. This was again emphasised in Gujerat State
Co-operative Land Development Ltd vs PR Mankad and Anors, where it was said:
“In our view the absence of a developed or fully blown dispute or difference
at the date of the issue of the writ, is not a ground for refusing stay, if
the court finds there is a dispute or difference, for to hold otherwise
would encourage a claimant who was subject to an arbitration agreement but
who did not wish to go to arbitration, to rush to court at an early stage in
order to defeat the arbitration agreement.
“Once it is established that there has arisen a dispute or difference or
question, the language of Section 6 of the Act places on the plaintiff the
burden to show that it ought not to be referred to arbitration. The fact
that there is apparent weakness in the respondent’s case should not be taken
as an excuse to brush aside an arbitration clause to which the appellant was
a party and which was being insisted on by the respondent.” |
