APPLICABILITY OF THE PRINCIPLE OF RES JUDICATA IN ARBITRATION PROCEEDINGS.

In the realm of arbitration, it is an irrefutable fact that there can be ‘Multiplicity’ with respect to the same contract i.e. multiple invocations, multiple references, multiple Arbitral Tribunals, multiple Awards and multiple challenges, between the same parties, in respect of the same contract or the same series of contracts. When such multiplicity give rise to multiple awards, can one award bar another proceedings from deciding a similar issue?

Would the principle of Res judicata be applied to a subsequent arbitration proceedings deciding on a similar issue.?

Although, section 19 of the A&C, Act 1996 does not bound the Arbitral tribunal by the principles of CPC, its principles can be indisputably applied as affirmed in many precedents.

Section 11 of the CPC stipulates the principles of Res Judicata. It springs from the latin phrase Nemo debet bis vexari pro una et eadem causa which means “no man should be vexed twice for the same cause.”

This principle is widely followed in civil and criminal proceedings in order to abstain from re-litigating issues that have already been decided.

The applicability of res judicata in arbitration proceedings has been rarely invoked, in P.C Ray and Co (India ) PVt Ltd. Vs. Union Of India. 1971 SCC Online Cal 88. while relying on a Privy Council bench of 1907 observed that An award will operate as res judicata in subsequent proceeding between the parties either in court or before the arbitrators unless the arbitrators in making the said award had acted without jurisdiction.  

The Supreme Court in K.V. George vs. Secretary To Government, Water and Power Department, Trivandrum and Another (1989) 4 SCC 595. upheld the applicability of Res Judicata in arbitration to avoid multiplicity of proceedings. Relying of the Daryo vs state of UP which opined that principles of res judicata are applicable to proceedings under Article 32 and 226 of the constitution, the bench held that when an award is passed after deciding the rights and liabilities with respect to a particular claim, the second reference of arbitration with respect to the same claim would be barred by the principles of Res judicata and, thus the subsequent award would be incompetent.

The Supreme court in Indian Oil Corporation Limited vs. SPS Engineering Limited (2011) 3 SCC 507 while deciding a matter under section 11 of the Act, affirmed that the judicial scope of the referral court is very limited and the decision of whether a claim is bared by Res judicata or not could only be determined by the Tribunal after examining the pleadings/ claims/issues of both the arbitration.

On a similar footing, the high court of Delhi in Parsvnath Developers Limited vs. Rail Land Development Authority . 2018 SCC Online DEL 12399 while referring the parties under section 11 of the Act to a subsequent arbitration arising out the same contract, observed that the plea of Res judicata or Order 2 rule II CPC can only be raised before the Arbitral tribunal who would determine after examining the claims and the defence.

Thus, in light of the precedents above, it cannot contended that the principles of Res judicata would not apply in arbitration proceedings when there are multiple references to arbitration with respect to the same contract. This principle would keep baseless multiplicity at check and would ensure smoother administration of arbitration proceedings.