Name: V.
Santhosh
Register Number: 15BLB1035
Moot Problem 2
Nithyanandham is company duly incorporated under the laws of Germany, having its registered
office in Berlin, Germany. The Organising Committee, Commonwealth Games, 2010 is a society
registered under the Societies Registration Act, 1860 established for the primary purpose of
planning, organising and delivering the Commonwealth Games, 2010 Chennai and having its
registered office in Chennai, India. The Nithyanandham entered into an agreement dated 11th
March, 2010 with the respondent for providing timing, score and result systems ("TSR
systems/services") as well as supporting services required to conduct the Commonwealth Games.
In consideration of the Nithyanandham's services as stipulated in the agreement, Nithyanandham
was to receive a total amount of 12345678 Euros. The Organizing Committee refused to make
the payment after the completion of Commonwealth Games. It issued a Press communication on
2nd February, 2011 declaring that payments have been withheld for "non-performance of the
contract". Nithyanandham protested against the previously mentioned communication through
letter dated 4 February 2011 to Finance Ministry and then served a formal Dispute Notification
on the respondent. On 7th February, 2011, the Organizing Committee called upon the
Nithyanandham to fulfill its obligations under the agreement including handing over of the
Legacy Boards, completion of the formalities of the material, which were required to be shipped
out in order to prepare the "agreement closure report". The Organizing Committee also stated
that they were not addressing the issue of invoking the Dispute Resolution Clause as they were
interested in settling the dispute amicably. Nithyanandham Company invoked arbitration as
provided in the agreement. It also nominated the arbitrator on its behalf namely Justice
M.S.Dhoni, former Judge of the Supreme Court of India. A notice to this effect was served on
the Organizing Committee through a communication dated 22nd April, 2013. Since no response
was received a reminder was issued on 29th May, 2013. Upon such failure, Nithyanandham have
filed petition before the Supreme Court. In the counter affidavit all the averments made by the
petitioners have been denied, as being incorrect in facts and in law. The respondents have raised
two preliminary objections, which are as follows:- (i) The petitioner has not followed the dispute
resolution mechanism as expressly provided in the agreement dated 11th March, 2010. No
efforts have been made by the petitioner to seek resolution of the dispute as provided under
Clause 12. On the other hand, the respondent through numerous communications invited the
petitioner for amicable resolution of the dispute. The respondent relies on communications dated
3rd January, 2011, 9th January, 2011, 10th January, 2011, 1st February, 2011 and 2nd February,
2011. (ii) The contract stands vitated and is void ab initio in view of Clauses 10 and 11 of the
Agreement dated 11th March, 2010. Hence, the petitioner is not entitled to any payment
whatsoever in respect of the contract and is liable to reimburse the payments already made.
Therefore, there is no basis to invoke arbitration clause. The respondent points out that a
combined reading of Cl. 10 and Cl. 11 would show that the petitioner had warranted that it will
never engage in corrupt, fraudulent, collusive or coercive practices in connection with the
agreement. The respondent may terminate the agreement whenever it determines that the
petitioner had engaged in any corrupt, fraudulent, collusive or coercive practice in connection
with the agreement. The respondent seeks to establish the aforesaid non-liability clause on the
basis of registration of Criminal Case being CC No. 22 of 2011 under Section 120-B, read with
Sections 420, 427, 488 and 477 IPC and S. 13(2) read with S. 13(1)(d) of the Prevention of
Corruption Act against Suresh, the then Chairman of the Organising Committee along with some
officials of the petitioner, namely Mr. Ramesh, Sales & Marketing Manager and General
Manager. It is further the case of the respondent that due to the pendency of the criminal
proceedings in the trial court, the present petition ought not to be entertained. In case the
arbitration proceeding continues simultaneously with the criminal trial, there is real danger of
conflicting conclusions by the two fora, leading to unnecessary confusion.
Nithyanandham have filed petition under Section 14 of Arbitration and Conciliation Act, 1996
read with Section 11(6) of Arbitration and Conciliation Act, 1996 for appointment of nominee
and presiding arbitrators.
Important Clauses of the Agreement Dated 11 March 2010:
Clause 10 – Warranty
Both parties undertake not to indulge in corrupt practices to induce execution of this Agreement.
Clause 11 - Violation of clause 10
Organizing Committee can terminate the agreement if there is a violation of clause 10.
Clause 12- Dispute Resolution
If a dispute arises between the parties out of or relating to this Agreement, any party seeking to
resolve the Dispute must must notify the existence and nature of the Dispute to the other party.
Upon receipt of the Notification the Parties must use their respective reasonable endeavors to
negotiate to resolve the Dispute by discussions between parties. If the Dispute has not been
resolved within 10 Business Days of receipt of the Notification then the parties must refer the
Dispute to the Chairman of Organizing Committee and the Chief Executive Officer or its
equivalent of the Service Provider. If the Dispute has not been settled within 5 Business Days of
referral, it shall be settled by arbitration. The Dispute shall be referred to a tribunal consisting
of three Arbitrators, one to be nominated by each party, with the presiding Arbitrator to be
nominated by the two arbitrators nominated by the parties. The Arbitrators shall be retired
judges of the Supreme Court or High Courts of India. However, the Presiding Arbitrator shall be
a retired Supreme Court Judge. The place of arbitration shall be Chennai. All arbitration
proceedings shall be conducted in English in accordance with the provisions of the Arbitration
and Conciliation Act, 1996 as amended from time to time. This will not affect each party's rights
to seek interlocutory relief in a court of competent jurisdiction. During a Dispute, each party
must continue to perform its obligations under this Agreement.
