INDU MALHOTRA, AJAY RASTOGI, J. - (1.) Leave granted. : On 14.04.2009, a Contract Agreement was executed between the Appellant and the Respondent-Contractor for the Construction of Diversion Tunnel, Dam, Intake and Desilting Arrangement including Hydro-mechanical Works of the Punatsangchhu-I Hydro-electric Project located in Wangdue Phodrang District in Bhutan. The contract provided for resolution of disputes through arbitration. The relevant terms of the Contract are as under : Clause 5 (i) (b) The law to which the Contract is to be subject and according to which the Contract is to be construed shall be the law for the time being in force in Bhutan and within the jurisdiction of Thimphu courts. Clause 67 (ii) Except where the decision has become final, binding and conclusive in terms of Sub Para (i) above disputes or differences shall be referred for arbitration through to an Arbitral Tribunal of three arbitrators appointed jointly by the PHPA and the Contractor. Where the mandate of an arbitrator terminates a substitute arbitrator shall be appointed according to the rules that were applicable to the appointment of the arbitrator being replaced. In the absence of an Arbitration Act in Bhutan, the Arbitral Tribunal shall follow/be guided by the basic principles and procedures as contained in the Indian Arbitration and Conciliation Act 1996. The parties shall be free to agree on a procedure for appointing the Arbitrators. Failing any agreement for appointment of Arbitrators, each party shall appoint one Arbitrator and the two appointed Arbitrators shall appoint the third Arbitrator, who shall act as the presiding Arbitrator. Clause 67 (iv) If either of the parties fail to appoint its arbitrators in pursuance of sub-clause (ii) above, within 30 days after the receipt of the notice of the appointment of its arbitrators or the two appointed Arbitrators fail to agree on third Arbitrator within thirty days from the date of their appointment then the appointment shall be made, upon request of a party, by the Chief Justice, Delhi High Court, India/Thimphu High Court, Bhutan or any person or institutions designated by him. Clause 67 (vii)(a) All arbitration shall be held at New Delhi, India/ Thimphu, Bhutan.
(2.) On 25.02.2013, the Kingdom of Bhutan enacted the Alternative Dispute Resolution Act, 2013 ('the Bhutan Act') to provide for settlement of disputes through arbitration. The Act came into force w.e.f. 14.03.2013.
(3.) Disputes arose between the parties with respect to certain claims made by the Respondent-Contractor. On 28.07.2020, the Respondent-Contractor sent a notice of arbitration to the Appellant-Authority under Clause 67 (ii) of the Contract, and nominated a retired Judge of this Court as its nominee arbitrator. ;