Where an arbitration clause is undisputed, the Court may mandate mediation before referring unresolved disputes to DIAC arbitration.

The petitioner filed a petition under Section 11(6) of the Arbitration and Conciliation Act, 1996, seeking appointment of an independent sole arbitrator to adjudicate disputes arising from the parties’ Agreement dated 14 July 2023.

The amount claimed was Rs.1,99,159/-. With the consent of both parties, the Court referred the matter to the Delhi High Court Mediation and Conciliation Centre (Samadhan), directing the parties to appear before it on 23 September 2026.

The parties agreed that, if mediation failed, the disputes could be referred to arbitration.

The arbitration agreement was contained in Clause 25 of the contract, which provided for conciliation followed by arbitration and contemplated appointment of a sole arbitrator where the contract amount was below Rs.100 crore.

Whether the disputes arising from the Agreement dated 14 July 2023 should be referred to mediation before proceeding with arbitration?

Whether, upon failure of mediation, the disputes could be referred to arbitration under Section 11(6) of the Arbitration and Conciliation Act, 1996 and Clause 25 of the contract?

Whether the Delhi International Arbitration Centre should appoint a sole arbitrator in accordance with its rules and the contractual arbitration clause?

The Court applied Section 11(6) of the Arbitration and Conciliation Act, 1996, which empowers the Court to take necessary measures for appointment of an arbitrator where the agreed appointment procedure has failed or has not been acted upon.

It relied on the existence of a valid arbitration clause in Clause 25 of the contract, which provided for conciliation and, upon failure thereof, arbitration by a sole arbitrator where the contract amount was below Rs.100 crore.

The Court also directed compliance with the statutory disclosure requirement under Section 12(2) of the Act.

The parties remained entitled to raise objections regarding arbitrability and jurisdiction before the arbitral tribunal.

Since the parties were agreed that the relatively small monetary claim should first be subjected to mediation, the Court referred the dispute to the Samadhan Mediation Centre.

At the same time, the parties were ad idem that, if mediation failed, the dispute should proceed to arbitration.

The Court found no impediment to arbitration because the existence of the arbitration clause was undisputed.

Clause 25 provided for a sole arbitrator for contracts below Rs.100 crore and prescribed the contractual mechanism for appointment.

Accordingly, rather than finally adjudicating the parties’ substantive disputes, the Court directed that DIAC appoint a sole arbitrator if the dispute was not settled by 16 October 2026, while preserving all objections concerning jurisdiction and arbitrability for determination by the tribunal.

If the dispute was not settled by 16 October 2026, DIAC was directed to appoint a sole arbitrator from its panel in accordance with Clause 25 of the contract and the DIAC Rules.

The arbitrator was directed to enter upon the reference within two weeks of appointment and furnish the requisite disclosures under Section 12(2) within two weeks thereafter.

The arbitrator’s fees were to be governed by the DIAC Schedule of Fees, and the parties were permitted to raise all legal objections before the tribunal.

The Court clarified that its observations were confined to the Section 11 proceedings and would not prejudice adjudication on the merits.