GAURI SHRIKHANDE
ARMY INSTITUTE OF LAW, MOHALI
(First Published on Volume 01 Issue 03, November 2016)
ARBITRAL TRIBUNAL & RES JUDICATA
The arbitrators which determine the outcome of the dispute are called the arbitral tribunal. The composition of the arbitral tribunal can vary enormously, with either a sole arbitrator sitting, two or more arbitrators, with or without a chairman or umpire, and various other combinations. In most jurisdictions, an arbitrator enjoys immunity from liability for anything done or omitted whilst acting as arbitrator unless the arbitrator acts in bad faith.
Arbitrations are usually divided into two types: ad hoc arbitrations and administered arbitrations.
In ad hoc arbitrations, the arbitral tribunals are appointed by the parties or by an appointing authority chosen by the parties. After the tribunal has been formed, the appointing authority will normally have no other role and the arbitation will be managed by the tribunal.
In administered arbitration, the arbitration will be administered by a professional arbitration institution providing arbitration services, such as the LCIA in London, or the ICC inParis, or the American Arbitration Association in the United States. Normally the arbitration institution also will be the appointing authority. Arbitration institutions tend to have their own rules and procedures, and may be more formal. They also tend to be more expensive, and, for procedural reasons, slower.
The duties of a tribunal will be determined by a combination of the provisions of the arbitration agreement and by the procedural laws which apply in the seat of the arbitration. The extent to which the laws of the seat of the arbitration permit "party autonomy" (the ability of the parties to set out their own procedures and regulations) determines the interplay between the two.
However, in almost all countries the tribunal owes several non-derogable duties. These will normally be:
· to act fairly and impartially between the parties, and to allow each party a reasonable opportunity to put their case and to deal with the case of their opponent (sometimes shortened to: complying with the rules of "natural justice"); and
· to adopt procedures suitable to the circumstances of the particular case, so as to provide a fair means for resolution of the dispute.
Unless, the parties determine the procedure to be followed by the arbitraltribunal in the course of proceedings, Section 19 of the Arbitration and Conciliation Act 1996 gives the discretion to the arbitral tribunal to determine its rules of procedure, whereby it is not under an obligation to follow the procedure contained in the Code of Civil Procedure, 1908 or the Indian Evidence Act, 1872. Based upon such agreement between the parties or the determination of the arbitral tribunal, the tribunal follows the procedure and resolves the dispute and makes either an interim award, which is also the part of the award, and in the end gives a final award with mandate of the arbitral tribunal comes to an end. After the termination of the proceedings of the arbitral tribunal, the question which arises is whether the reference for the second time on the same dispute to arbitration is barred by the principle of arbitration? It is true that the courts in India often encounter the problem of application of doctrine of res judicata in an award made by the arbitral tribunal.[1] In order to find a solution to this problem, it is imperative to comprehend the concept of res judicata and its application to a suit before the law court. Section 11 of the Code of Civil Procedure embodies the doctrine of res judicata, which has a wide application and extends to the arbitration awards besides litigation, since the award of the arbitral tribunal has same applicability as the decree of a Civil Court. Section 11 of the Code of Civil Procedure provides: “No Court shall try any suit or issue in which the matter directly and substantially in issue has been directly and substantially in issue in a former suit between the same parties, or between parties under whom they or any of them claim, litigation under the same title, in a Court competent to try such subsequent suit or the suit in which such issue has been subsequently raised, and has been heard and finally decided by such Court.” Thus the doctrine of res judicata is a procedural provision and cannot be invoked in the same Court in the same matter by the same parties when the matter has been decided finally by the Court, and this is done to preserve the effect of the judgment given by the Court. Res judicata, however, does not bar making of an appeal, since it is a mere extension of the law suit to the higher Court having appellate jurisdiction. The doctrine of res judicata refers to the binding effect of the judgment in a prior case on the claims or issues in subsequent litigation. It also means the judged matter. Res judicata is a species of estoppel and has two primary applications. One where it is referred as true res judicata, which prevents a party from suing on a claim or cause of action that
has or could have been determined by a competent court in a final and binding judgment, and the second application of res judicata may be referred as collateral estoppel or issue estoppel, which prevents for the second time the litigation of the specific issues actually litigated and determined by a final judgment, where the issues were essential to the judgment (Wong, 2005, p. 53). On these points, the Courts in the later law suits are required to find as to which of the two applications is attracted so that it can bar the re-litigation with regards to the other as many causes of action may apply to the same facts and vice versa.
In India, a distinction has been made between res judicata and issue estoppel. Whereas res judicata debars a court from exercising its jurisdiction to determine the suit if it has attained finality, the doctrine of issue estoppel is invoked against the party. Consequently, if such issue is decided against him, he would be estopped from raising the same in the subsequent proceedings.1 In Bhanu Kumar Jain v. Archana Kumar[2], the Supreme Court held that the doctrine of res judicata creates a kind of estoppel, viz. estoppel by Accord. Another sub-set of doctrine of res judicata as applied by the Indian Courts is the ‘Constructive res judicata’, a rule engrafted in Explanation IV of Section 11 of the Code of Civil Procedure, restricts any claim to be raised in a subsequent proceeding wherein an earlier proceeding such claim could have been raised and decided. Thus the doctrine of constructive res judicata seeks to bar determination and enforcement of claims which the party failed to raise in the appropriate forum as was HELD by the Supreme Court in Ramachandra Dagdu Sonavane (D) by L.Rs. v. Vithu Hira Mahar (Dead) by Lrs. & Ors. [3]. In the matters of reference to the arbitral tribunal, the doctrine of res judicata is attracted in a way it applies to the suit in a law court. Nonetheless, the doctrine is not applicable to the interim award made under Section 31 (6) of the Act, whereby the arbitral tribunal is empowered to make an interim arbitral award on any matter with respect to which it may make final arbitral award. In the matters of arbitration, the doctrine of constructive res judicata has no application[4]. Thus where a reference to arbitration does not include the whole claim, a subsequent reference of such left out claims will not be barred by the doctrine of constructive res judicata. The Calcutta High Court in Sudhir Kumar v. J.N. Chemicals[5], applied the doctrine of res judicata and prohibited issuance of subsequent award on the basis of making of the arbitration agreement between the parties to dispute in arbitration.
In Venture Global Engineering v. Satyam Computers Ltd. & Another[6], where the Supreme Court held that the foreign award was enforceable in India and an application could be made under Section 34 of the Act of 1996 for setting aside the award even in case of foreign awards. Following the decision of the Supreme Court in Venture Global, in one of the most significant judgments, the Delhi High Court in Anita Garg v. Glencore Grain Rotterdam B.V. [7], HELD that the appellants were barred by res judicata to make an application as the they had defended the execution petition filed by the respondent. The petition was preferred under Section 34 of the Arbitration and Conciliation Act, 1996 against the interim award and the final award rendered in an international commercial arbitration and the learned single judge of Delhi High Court held that the foreign award was enforceable. Thus the doctrine of res judicata would also apply to the foreign awards. However, a recent ruling of the Constitutional Bench of the Supreme Court on September 6, 2012, on the question of international commercial disputes seated outside India in the case of Bharat Aluminium Co. v. Kaiser Aluminium Technical Service Inc., overruled the earlier decision of Bhatia International v. Bulk Trading S.A.[8], where the Supreme Court allowed provisions of Part I of the Arbitration and Conciliation Act relating to interim relief and setting aside of the arbitral award to international arbitration disputes seated outside India, which consequently permitting the Indian Courts to challenge the foreign awards, as was laid down earlier in Venture Global case. In Bharat Aluminium it was held that in case of foreign award, the Court having jurisdiction over the subject matter of award would continue to be the court to which an enforcement application would lie. Thus, it is clear that where the seat of arbitration in case of international disputes is in India, then only the Courts in India can apply relevant provisions of Part I of the Act and can enforce that award. This further makes it clear that doctrine of res judicata is also applicable to the foreign awards madeoutside India and the same are enforceable or annulled by the foreign courts having jurisdiction on the subject matter.