In a significant ruling, the Calcutta High Court clarified that a settlement of disputes by an expert does not constitute arbitration unless there is clear intention from both parties to submit to an independent arbitrator. This decision underscores the distinction between expert determination and arbitration in the context of dispute resolution.
Case Background
The case involved a contractual dispute where one party sought to settle the issue through expert determination, as stipulated in the contract. The opposing party contended that this amounted to arbitration and should be treated as such under the Arbitration and Conciliation Act, 1996.
Court’s Observations
The Calcutta High Court, in its judgment, highlighted the following points:
- Definition and Scope:
- Expert Determination: The court noted that expert determination is a process where an expert is appointed to settle a dispute based on their knowledge and expertise. This process is typically binding on the parties but does not involve the legal procedures and formalities associated with arbitration.
- Arbitration: Arbitration, on the other hand, is a formal legal process where a neutral third party, the arbitrator, is appointed to adjudicate the dispute. The arbitrator’s decision is legally binding and enforceable under the Arbitration and Conciliation Act.
- Intent of the Parties:
- The court emphasized that for a process to be classified as arbitration, there must be a clear and mutual intention from both parties to submit the dispute to arbitration. In the absence of such an intention, the process remains expert determination.
- Contractual Terms:
- The court examined the contractual terms and found that the agreement explicitly called for expert determination and did not reference arbitration. Therefore, the settlement process followed in this case was not arbitration.
Legal Implications
This ruling is crucial as it delineates the boundaries between expert determination and arbitration. It ensures that parties cannot unilaterally impose arbitration where the contractual agreement specifies expert determination. This distinction helps maintain the integrity of contractual agreements and provides clarity on the applicable legal framework for dispute resolution.