Delhi High Court: Arbitral Tribunals Must Assess Evidence Relevance Before Seeking Court Assistance
The Delhi High Court recently held that, under Section 27 of the Arbitration and Conciliation Act, an arbitral tribunal presented with a party's application seeking Court assistance in obtaining evidence must form a preliminary judgment on the evidence's relevance and admissibility.
Justice Sachin Datta, the presiding judge in the case, underscored that the tribunal, when exercising its authority under Section 27 of the Act, should not adopt a purely mechanistic approach. Instead, it is mandated to meticulously scrutinise, even on a preliminary basis, the relevance of the proposed witness before granting approval to any party's application for such assistance.
The Court determined that while the Arbitral Tribunal is not legally bound by the Code of Civil Procedure or the Evidence Act, it retains the responsibility to exercise discretion and form an independent opinion when permitting witness testimony.
The petitioner submitted a petition under Section 27 of the Arbitration and Conciliation Act, 1996 (A&C Act), requesting an order requiring a witness to appear before the Arbitral Tribunal and directly present evidence.
A dispute arose concerning the chartering of the vessel "MV Peace Gem" for cargo transport. The respondent claimed demurrage against the petitioner for the vessel's stay at Haldia Port, India, from May 7, 2019, to May 20, 2019.
The petitioner asserted that the vessel's unfitness due to infrastructural damage rendered the demurrage claim invalid.
A key issue before the Arbitral Tribunal was whether a damaged starboard combined pilot ladder rendered the vessel incapable of berthing and discharging goods.
The petitioner presented an email from the Kolkata Port Trust confirming the denial of access to the vessel due to the damaged pilot ladder. They sought permission to request the Court's assistance in acquiring testimony from the relevant officer at the Kolkata Port Trust. The Arbitral Tribunal granted this request without assessing the evidence's relevance.
The petitioner argued that the Arbitral Tribunal's order demonstrated a preliminary examination and a conscientious application of mind, stressing that the tribunal's authority under Section 19 of the A&C Act permitted them to postpone the decision on the evidence's relevance. In response, the respondent countered that the Court should not issue orders under Section 27 when the tribunal's order reveals a misunderstanding of the law or a complete lack of consideration.
They further opposed the petitioner's request, highlighting the absence of material to judge the evidence's relevance and stressing the discretionary nature of the Court's power under Section 27.
While recognising the established principle of non-interference in Arbitral Tribunal orders under Section 27, the Court expressed disapproval of the tribunal's decision in this instance.
The Court underscored the importance of the Arbitral Tribunal exercising its discretion and conducting a preliminary evaluation of the relevance of any evidence sought to be introduced, even in the absence of mandated procedures.
Drawing upon established precedents, the Court asserted that its role under Section 27 is not one of adjudication. It cannot definitively determine the admissibility, relevance, materiality, or weight of evidence. However, the Court held that when an arbitral tribunal considers a party's application under Section 27 of the A&C Act seeking permission to utilise the Court's assistance in obtaining evidence, it must form a preliminary judgment on the evidence's relevance and admissibility.
While dismissing the petition, the Court instructed the Arbitral Tribunal to undertake a preliminary evaluation of the evidence's relevance before granting the petitioner's request for Court assistance.
The Court ruled that disputes regarding non-payment of arbitral fees were not appropriate for adjudication under Section 27.