Why to go for costly foreign arbitration, asks SC

Chief Justice N V Ramana, a protagonist of low cost resolution of litigation through arbitration and mediation, was shocked by the revelation that an arbitration under International Chamber of Commerce Paris required a pre-deposit of more than Rs 5 crore.

The dispute is between Bharat Coking Coal, a PSU and subsidiary of Coal India, and AMRBBB, a Consortium comprising AMR India Limited and Building Business Bridges UK Limited (BBB), AMR-BBB was awarded the contract for development of Kapuria Block and extraction of coal for a minimum guaranteed production of 2 million ton per year on turnkey basis, for the amount of Rs 798.82 crores as capital cost for development phase-I, and Rs 1427.25 crores as Revenue cost for phase-II. Some disputes arose in execution of the contract.

AMR-BBB approached ICC Paris for arbitration under the contract, which purportedly permitted a single arbitrator with the seat of arbitration at New Delhi. As a precursor, the parties were asked to deposit $2,88,000 (Rs 2.15 crore) as arbitration cost.

Bharat Coking Coal, through solicitor general Tushar Mehta said since the subject matter of arbitration was technical in nature, it had requested the ICC for a three-member arbitral panel. ICC had sought a response from AMR-BBB, which had agreed, but later withdrew from the arbitration process. Mehta said Bharat Coking Coal is ready for arbitration but there should be a technical member on the panel.

Appearing for AMR-BBB, senior advocate Mukul Rohatgi said that when ICC wanted a pre-deposit of $288,000 for a single member arbitration, the private company had deposited $78,000 while Bharat Coking Coal deposited only $5,000. When the request of the PSU for a 3-member panel was accepted, the ICC raised the pre-deposit to $688,000 (Rs 5.14 crore).