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Compendium of Landmark Arbitration Case Laws in Nepal
Pioneer Law Associates has created this compendium of case law
| S.N. | CASE DETAIL AND CITATION | RELEVANT LAWS | PRINCIPLE(S) ESTABLISHED (inter alia, as applicable) |
|---|---|---|---|
| 1. | Department of Roads, Babarmahal v. Arbitral Tribunal comprising of Mr. Sureshman Shrestha, Ms. Kamala Upreti and Mr. Narendra Kumar Shrestha & ors., 2077
Decision No. 10586
Link- https://supremecourt.gov.np/publication/materials/110627.pdf
|
Section 30(2)
Arbitration Act, 2055
Section 34(1) Evidence Act, 2031
|
The Hon’ble Supreme Court held that the Hon’ble Appellate Court has the authority to invalidate an arbitral award and revert the matter back to arbitration only under the circumstances given under Section 30(2) of the Arbitration Act, 2055.
[Para 6, and 7] |
| 2. | Yakshyadhoj Karki v. High Court Patan and others, 2076
Decision No. 10369
Link: https://nkp.gov.np/full_detail/9435
|
Arbitration Act, 2055
Public Procurement Act, 2063
Contract Act, 2056
|
The Hon’ble Supreme Court held that:
1. When an arbitration clause is included in a contract, the same is severable from the main contract and remains enforceable until disputes pertaining to the contract or performance of the contract have been resolved. 2. Behavior of one party, general communications or one-sided offer cannot be deemed to have amended the contract. 3. Where the parties have not agreed to resolve disputes through arbitration, Section 3 of the Arbitration Act, 2055 in relation to resolution of disputes through arbitration would not be applicable.
[Para 12, and16]
|
| 3. | Adv. Devendra Pradhan (on behalf of Hanil Engeeneering & Construction Co. Ltd.) v. Appellate Court, Patan, 2075
Decision No. 10138
Link: http://nkp.gov.np/full_detail/9190/?keywords
|
Sections 34(2)(a) and (b); and Section 16(3)
Arbitration Act, 2055
Article V.1.b and Article V.1.d of United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), 1958
|
The Hon’ble Supreme Court held that:
1. A dispute resolution clause is considered to be a separate contractual agreement in terms of the doctrine of severability, and the arbitration clause is not affected by the status of the main contract. 2. The parties are free to choose separate substantive and procedural laws for the purpose of the arbitration clause. If the parties choose the law of one country for substantive part of a contract, it shall not be understood that the parties have chosen the law of the same country for procedural and appointment related matters. 2. Where the contract provides that disputes shall be settled through amicable settlement, the parties must attempt to amicably resolve the dispute as envisioned by the contract. 3. Initiating arbitration proceeding or giving of an award overlooking the provision requiring the parties to first attempt dispute resolution through amicable settlement is contrary to the intention of the contract in terms of which the parties were to first attempt amicable settlement. (Note: This is in relation to multi-tiered dispute resolution clauses i.e. dispute resolution clauses that stipulate recourse to one or more alternative dispute resolution methods before arbitration can be initiated) 4. Separate notices should be served for separate matters as prescribed by the law. The arbitral award shall lose its validity if the notice requirements have not been adequately fulfilled. If one of the parties has not been given sufficient opportunity to be heard, the same is contrary to the principles of natural justice and the resultant arbitral award is not enforceable.
[Para 3, 4, 5, 10, 11, 12, 13, 14, and 17]
|
| 4. | Yashasvi Shamsher JBR v. Vaiwers Developers Pvt. Ltd., 2074
Decision No. 9847
Link: http://nkp.gov.np/full_detail/8898/
|
Section 3, Arbitration Act
2055
|
The Court stated that an Arbitration Agreement is deemed to be constituted in the following situations:
1. agreement between the parties to resolve dispute through arbitration as per Section 3(a) of the Arbitration Act, 2055 within the contract, or; 2. through a separate agreement, or; 3. when parties exchange written communications deciding to submit the dispute to arbitration, or; 4. when Respondent submits its Statement of Defense in response to Statement of Claim submitted by Claimant without protesting arbitration as the dispute settlement mechanism.
The Hon’ble Supreme Court also held that in the absence of the above-mentioned conditions, an agreement between parties to resolve any dispute themselves cannot be construed to mean that the parties had an intention to resolve the dispute through arbitration.
[Para 2]
|
| 5. | Raju K.C. on behalf of Nepal Air Service Corporation v. Appellate Court Patan, 2067
Decision No. 8523 Link: http://nkp.gov.np/full_detail/3375
|
Sections 7(3), 29(1), 30(1), and 42((2) and (3)) Arbitration Act, 2055
Chapter on Court Management, No. 193, 208 Muluki Ain, 2020
|
The Hon’ble Supreme Court held that if any party refuses to participate in the arbitration proceeding despite receiving notice of the same, such party cannot approach the Hon’ble Appellate Court in order to invalidate the arbitral award on the ground of non-issuance of notice.
[Para 6]
|
| 6. | Bhanu Prasad Acharya on behalf of Nepal
Government, Ministry of Finance V. Damodar Ropeways and Construction Company et al., 2067
Decision No. 8368
Link: http://nkp.gov.np/full_detail/3614/
|
Sections 19, and 21(2)
Arbitration Act, 2038
|
The Hon’ble Supreme Court, inter alia, held the following:
1. Validity of an arbitral award cannot be determined in the same manner as other cases. In terms of factual interpretation, the arbitral tribunal is to be considered well informed and knowledgeable. 2. The Hon’ble Supreme Court needs to conduct judicial examination of the arbitral award and decision of the Hon’ble Appellate Court to ascertain if the conditions under Section 21(2) of the Arbitration Act, 2038 have been met. 3. When both parties have clearly established and agreed on certain aspects, the decision maker should not create a dispute out of such matters. 4. The process of dispute resolution through arbitration is an informal and alternate process within the larger judicial process. An arbitral award must be supported by established facts, corroborating evidence and the written language of the contract. Interpretation based on prevalent laws and established principles should only be done when the contract is unclear or silent.
[Para 1, 7, 15, and 18]
|
| 7. | Bikram Pandey on behalf of Kalika, Kanchanjangha JV. V. Ministry of Physical Planning and Construction, Department of Road et al., 2067
Decision No. 8437 Link: http://nkp.gov.np/full_detail/3529/
|
Sections 5, 6(4), 7, and 7(1), 7(2)
Arbitration Act, 2055
|
The Hon’ble Supreme Court held the following:
1. The UNCITRAL Rules become applicable in a manner similar to provisions of a contract when parties have opted to resolve disputes through arbitration in accordance with the UNCITRAL Rules, and these Rules are only applicable to the arbitration proceeding. 2. The UNCITRAL Rules do not apply in a manner similar to laws and the scope of the same can be restricted by the parties through mutual consent. 3. The provision of the UNCITRAL Rules whereby a party may request the secretary general of the Permanent Court of Arbitration to designate the appointing authority is not a restrictive provision. The parties are free to approach the national Hon’ble Appellate Court pursuant to the national law for appointment of arbitrators.
[Para 2, 3, and 5]
|
| 8. | Department of Road et al. V. Waiba Construction Co. Pvt. Ltd., Samakhusi, Kathmandu et al., 2067
Decision No. 8479 Link: |
Sections 30(1)(c) and(d), and 32 of the
Arbitration Act, 2055
|
The Hon’ble Supreme Court held that where the dispute is to be resolved through arbitration, the court cannot enter into factual questions, consider evidence and provide a decision in a manner similar to a normal case. Further, the Hon’ble Supreme Court also held that where there has not been any grave error in law, the court cannot invalidate an arbitral award.
[Para 9]
|
| 9. | Manjit Singh on behalf of Bakhtawar Singh V. Kankai Irrigation Project, Irrigation Department et al., 2067
Decision No. 8397
Link: http://nkp.gov.np/full_detail/3690/
|
Section 11(2), and 21(2)
Arbitration Act, 2038
Section 14(1) Arbitration Act, 2055
No. 192, Chapter on Court Management. Muluki Ain, 2020
|
The Hon’ble Supreme Court held that laws of Nepal are not substituted by applicable rules in relation to international commercial disputes and that the provisions of Arbitration Act, 2038 would remain applicable. Further, it was held that the Hon’ble Appellate Court, in arbitration matters derives its authority from Section 21(2).
[Para 4, and 5]
|
| 10. | Umakant Jha V. Appellate Court, Patan, 2066
Decision No. 8156
Link: http://nkp.gov.np/full_detail/2641/
|
Sections 3, 3(2), 30(1), and 30(3)
Arbitration Act, 2055
|
The Hon’ble Supreme Court held that the Hon’ble Appellate Court only has a correctional jurisdiction pursuant to Section 30 of the Arbitration Act, 2055.
The Hon’ble Supreme Court also held that the question of limitation period is purely a legal question and can arise at any stage.
[Para 12, and13]
|
| 11. | Anil Goyal on behalf of Varun Beverage Pvt. Ltd. V. National Marketing and Sales Pvt. Ltd. et al., 2066
Decision No. 8097
Link: http://nkp.gov.np/full_detail/7584/
|
Section 3, and 21(2)
Arbitration Act, 2038
|
The Hon’ble Supreme Court held that the decision of the arbitral tribunal in relation to an agreement which is connected to and cannot exist without the main contract, does not exceed the jurisdiction of the tribunal.
Further, the Hon’ble Supreme Court also held that when a party has already implemented the arbitral award and the decision of the Hon’ble Appellate Court upholding such award, then the same cannot be challenged through writ jurisdiction of the Hon’ble Supreme Court.
[Para 4, 5, and 6]
|
| 12. | Krishna Chandra Jha V. Dinesh Bhakta
Shrestha on behalf of Sumit Prakash Asia Pvt. Ltd., 2066
Decision No. 8128
Link: http://nkp.gov.np/full_detail/8074/
|
Section 9, and 21
Arbitration Act, 2038
|
The Hon’ble Supreme Court held that the arbitral tribunal cannot decide on matters outside the conditions and provisions of the contract and that the tribunal does not have any discretionary powers.
[Para 10]
|
| 13. | Krishi Samagri Co. Ltd., Head Office, Kathmandu V. Appellate Court, Patan, 2064
Decision No. 7905
Link: http://nkp.gov.np/full_detail/3922/
|
Section 21(2) and (3) of the
Arbitration Act, 2038
|
The Hon’ble Supreme Court held that the intention of the parties at the time of the contract should be interpreted through the contract itself. The contract cannot be interpreted outside the conditions mentioned in the contract.
However, if the dispute pertains to any condition not specifically mentioned in the contract, the contract and intention of the parties may be interpreted in the context of the contract document, previous correspondences, general principles of contract law, international practice and previous practice of the court.
[Para 15, and 20]
|
| 14. | National Construction Company, Nepal V. Appellate Court, Patan, 2065
Decision No. 7933
Link: http://nkp.gov.np/full_detail/2178/
|
Section 6(1), 7(1), 7(3), and 16 Arbitration Act, 2055
|
The Hon’ble Supreme Court held the following:
1. When an arbitration clause is included, the contract may also provide for the procedure for appointment of arbitrators, number of arbitrators and other similar conditions. However, when the contract is silent on these issues, or if the parties are not able to appoint arbitrator/s as per the procedure provided for by the parties in the contract, the same may be done by the Hon’ble Appellate Court pursuant to Section 7 of the Arbitration Act, 2055 2. When the parties have agreed to resolve disputes through arbitration, one party cannot refuse to appoint arbitrators and prevent arbitrators from being appointed by the other party. 3. When the contract contains a multi-tiered dispute resolution clause, the Hon’ble Appellate Court, in the role of appointing authority pursuant to Section 7 of the Arbitration Act, 2055, must confirm whether the dispute resolution mechanisms prior to arbitration have been invoked. 4. Even when an agreement has been terminated, the provision to resolve disputes arising from such an agreement through arbitration still survives. The provision to resolve disputes through arbitration may not be frustrated by any party for any reason.
[Para 3, 4, 8, 11, 13]
|
| 15. | Rajendraman Sherchan on behalf of Vijay Construction Pvt. Ltd. V. Appellate Court, Patan, 2064
Decision No. 7823 Link: http://nkp.gov.np/full_detail/3794/
|
Sections 6(1) & 7(1)
Arbitration Act, 2055
|
The Hon’ble Supreme Court held that when a party has not complied with Section 6(1) of the Arbitration Act, 2055, which requires the parties to initiate appointment of arbitrators within three months of reason to commence arbitration arising, unless otherwise provided by the contract, the procedure for appointment of arbitrators through the court pursuant to Section 7(1) of the Arbitration Act, 2055 cannot be initiated.
The Hon’ble Supreme Court also held that the question of limitation period is a legal question and there is no legal provision which restricts the Hon’ble Appellate Court from examining the same.
[Para 9, 10]
|
| 16. | Anil Kumar Pokhrel on behalf of Sunsari Morang Irrigation Development Planning/Project V. District Court, Kathmandu, 2064
Decision No. 7836 Link: http://nkp.gov.np/full_detail/3812/
|
Sections 30, 31 & 32
Arbitration Act, 2055
|
The Hon’ble Supreme Court held that when an arbitral award is sought to be invalidated at the court, the limitation period for implementation of arbitral award pursuant to Section 32 of the Arbitration Act, 2055 only begins after the final judgment on the invalidation petition has been rendered.
[Para 17, 18]
|
| 17. | Suman Prasad Sharma on behalf of Melamchi Khane Pani Bikash Samiti V. Lasunaula Khimti Construction, 2063
Decision No. 7699 Link: http://nkp.gov.np/full_detail/2640
|
Section 30(1),
Arbitration Act, 2055; Rule 14(3), Arbitration (Court Procedure) Regulation, 2059; Chapter on Court Management, No. 5 Muluki Ain, 2020 |
The Hon’ble Supreme Court held that when the Petitioner is within the limitation period prescribed by law, the Petitioner cannot be denied justice based on the fact that an incorrect law was cited by the petitioner.
[Para 10] |
| 18. | Rakesh Kumar on behalf of The Oriental Insurance Company Ltd. V. Ramkrishna Rawal, 2066
Decision No. 8078
Link: http://nkp.gov.np/full_detail/2655/
|
Section 13
Arbitration Act, 2038
|
The Hon’ble Supreme Court held that where parties have agreed to resolve disputes through arbitration and oust the jurisdiction of the court, the court does not have the jurisdiction to hear such disputes. Under such circumstances, if a petition is filed at the court, then the same is contrary to provisions of the contract, and the court does not have jurisdiction to hear the same.
[Para 7, 9]
|
| 19. | Aamodanand Mishra V. Appellate Court, Patan, 2062
Decision No. 7546
Link: http://nkp.gov.np/full_detail/2434/
|
Section 7
Arbitration Act, 2055
|
The Hon’ble Supreme Court held that if a contract requires disputes to be resolved through adjudication prior to arbitration and if an adjudicator cannot be appointed by the parties as per the contract, it cannot be deemed that the Arbitration Act, 2055 is silent on such matters and the right of the parties to resolve the dispute through arbitration cannot be deemed frustrated.
[Para 10]
|
| 20. | Yadav Prasad Pokhrel on behalf of The Bridgeline Corporation V. Appellate Court, Patan, 2062
Decision No. 7508 Link: http://nkp.gov.np/full_detail/2334/
|
Section 21(2)
Arbitration Act, 2038
Section 11(1) Administration of Justice Act, 2048
Article 88(2) The Constitution of Kingdom of Nepal, 2047
|
The Hon’ble Supreme Court held the following:
1. Judicial review is a constitutionally guaranteed remedy and that the Hon’ble Supreme Court has a duty to review decisions which are contrary to the principles of law and established precedents. 2. Pursuant to Article 88(2) of the Constitution of Nepal, 2047 (B.S.), if there is no effective alternate remedy, disputes may be submitted to the writ jurisdiction of the Hon’ble Supreme Court. 3. Pursuant to the authority granted by Section 21 of the Arbitration Act, 2038 (B.S.), when an arbitral award is invalidated by the Hon’ble Appellate Court, the Hon’ble Appellate Court may either revert the dispute back to the same arbitral tribunal or to a different arbitral tribunal and direct that the dispute be resolved through arbitration. Other than this, the Hon’ble Appellate Court may not give any final decision on the matter.
[Para 37, 45, 48]
|
| 21. | Chandra Kumar Golchha V. Patan Hon’ble Appellate Court, 2062
Decision No. 7516
Link: http://nkp.gov.np/full_detail/2352/
|
Sections 6, 7 and 16, Arbitration Act;
2055, Section 74, Contract Act, 2056 and Article 84, Constitution of Kingdom of Nepal, 2047 |
The Hon’ble Supreme Court held that the Hon’ble Appellate Court must limit itself within the subject matter of appointment of arbitrators in petitions submitted to the Hon’ble Appellate Court pursuant to Section 7 of the Arbitration Act, 2055 which provides the mechanism for appointment of arbitrators by the Hon’ble Appellate Court.
[Para 8] |
| 22. | Krishna Chandra Jha on behalf of Krishi Samagri Corporation V. Dinesh Bhakta Shrestha on behalf of Sumit Prakash Asia, 2059
Decision No. 7089
Link: http://nkp.gov.np/full_detail/3145/
|
Section 9, 21(2)
Arbitration Act, 2038
Section 8, 9, 12 Administration of Justice Act, 2048
|
The Hon’ble Supreme Court held the following:
1. The decision to resolve disputes through alternate dispute resolution practices is based on party autonomy and the arbitral award is final and binding on the parties. Even if the arbitral award is erroneous, the same can only be invalidated if the exceptions provided by law are applicable. 2. The Hon’ble Appellate Court may at the most invalidate the arbitral award and revert the dispute to arbitration if any of the conditions pursuant to Section 21(2) of the Arbitration Act, 2038 are satisfied. 3. There is no legal provision enabling the Hon’ble Supreme Court to hear appeal or revision petitions regarding decisions of the Hon’ble Appellate Court made pursuant to Section 21(2) of the Arbitration Act, 2038. 4. Previous rulings of the joint bench of the Hon’ble Supreme Court whereby such appellate and revision petitions were allowed (Decision No. 6110 and Writ No. 3302 of 2056 B.S.) were overruled. 5. If no alternate remedies are available in relation to challenging the decisions of Hon’ble Appellate Court in relation to Section 21 of the Arbitration Act, 2038 (B.S.), writ jurisdiction of the Hon’ble Supreme Court may be exercised.
[Para 16, 17, 18, 20, 21]
|
| 23. | Governor Harishankhar Tripathi et al. V. Rajendraman Sherchan on behalf of Vijay
Construction Pvt. Ltd., 2052
Decision No. 6110
Link: http://nkp.gov.np/full_detail/6719/
|
Section 5(2), 21 (2)
Arbitration Act, 2038
|
The Hon’ble Supreme Court held the following:
1. The jurisdiction of the Hon’ble Appellate Court is restricted by Section 21(2) of the Arbitration Act, 2038. The Hon’ble Appellate Court cannot go beyond this limited jurisdiction and decide on factual matters considered by the arbitral tribunal. 2. The Arbitration Act, 2038 is silent in terms of how parties to arbitration should present their claim and response before the tribunal. In such a situation the parties may themselves decide on a specific procedure through mutual agreement. When the parties do not decide on such a procedure, the Arbitration Act, 2038 does not bar the tribunal from deciding upon such procedure. 3. Where the parties have contractually agreed to resolve disputes through arbitration, refusal of one of the parties to do the same is a violation of the contractual agreement. 4. Arbitral tribunals are barred from deciding on issues other than those for which the tribunal is appointed, unless parties to the arbitration provide their mutual consent.
[Para 12, 13, 14, 17]
|
| 24. | Faruk Solan on behalf of National Project Construction Corporation V. Secretary of the Water Resource Ministry et al., 2052
Decision No. 5088
Link: http://nkp.gov.np/full_detail/6920/
|
Article 23, 88(2)
Constitution of Kingdom of Nepal, 2047
Section 13 Arbitration Act, 2038
|
The Hon’ble Supreme Court held that when parties have mutually agreed to include an arbitration clause in the contract, such parties are required to resolve any dispute arising pursuant to the contract through arbitration.
[Para 11] |
| 25. | Bakhtawar Singh Dhan on behalf of B.S.Dhan And Company V. HMG Kankai
Development Board, 2048
Decision No. 4296
Link: http://nkp.gov.np/full_detail/865/
|
Section 5, 21
Arbitration Act, 2038
No. 12, Chapter on Court Management Muluki Ain, 2020
|
The Hon’ble Supreme Court held that arbitration can be commenced even without written consent between the parties to appoint arbitrators as there is no legal provision to that effect.
[Para 10]
|
| 26. | Poshan Nath Nepal on behalf of Water Supply and Sewerage Committee V. Western Regional Court, 2044
Decision No. 3111
Link: |
Section 5
Arbitration Act, 2038 Section 13 Administration of Justice Act, 2031
|
The Hon’ble Supreme Court held that there is no provision for appeal with regard to an order for appointment of arbitrator pursuant to Section 5(2) of the Arbitration Act, 2038 and that such orders are final.
[Para 10] |
