Appointment of Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996: Disputes Arising from Licence Agreement

Aadrikaa Legal Services (ALS)- Law I Litigation I Arbitration

Date: 08.09.2026

Appointment of Sole Arbitrator under Section 11(6) of the Arbitration and Conciliation Act, 1996: Disputes Arising from Licence Agreement

This article examines the recent Delhi High Court judgment in the case of Flemingo (DFS) Private Limited versus Airports Authority of India (AAI), focusing on the arbitration and contractual disputes arising from the operation of duty-free shops at Amritsar Airport. The case highlights key legal principles regarding arbitration agreements, limitation periods, and the scope of judicial intervention at the referral stage.

Background of the Dispute

1. Parties Involved:
   • Flemingo (DFS) Private Limited: A company operating duty-free shops at airports.
   • Airports Authority of India (AAI): A statutory body managing civil aviation infrastructure in India.
2. Contractual Relationship:
   • In 2009, AAI awarded Flemingo the license to operate duty-free shops at Amritsar Airport, formalized by a Licence Agreement dated 30.09.2011 for five years.
   • Spaces allotted: 66.64 sqm (Arrival) and 46.58 sqm (Departure).
   • The agreement included an arbitration clause (Clause 57) for dispute resolution.
3. Emergence of Disputes:
   • Flemingo raised issues regarding excess rent and concession fees charged by AAI.
   • Multiple correspondences and reminders were exchanged from 2017 to 2021.
   • AAI formally rejected Flemingo’s claims on 28.09.2021 and 11.10.2021.
   • Flemingo invoked arbitration via legal notice on 14.03.2022.
   • Mediation was attempted but failed, leading to the present petition for appointment of an arbitrator.

Key Legal Issues

1. Limitation Period for Arbitration Petitions

• AAI’s Argument: The petition was time-barred, as the first invocation of arbitration was in 2017, and the current petition was filed in 2025.
• Flemingo’s Argument: The cause of action arose only after AAI’s formal rejection in October 2021. The period spent in mediation should be excluded from the limitation calculation.

2. Scope of Referral Court under Section 11 of the Arbitration Act

• The court’s role is limited to verifying the existence of a valid arbitration agreement and whether the petition is within the limitation period.
• Detailed examination of whether claims are time-barred or arbitrable is reserved for the arbitrator.

3. Arbitrability of Claims

• AAI contended that some claims (e.g., concession fee) were outside the scope of the original agreement.
• The court held that such issues should be decided by the arbitrator, not at the referral stage.

Court’s Analysis and Findings

1. Limitation Calculation:
   • The court found that the formal rejection of claims by AAI on 11.10.2021 was the breaking point for limitation.
   • Flemingo’s notice invoking arbitration (14.03.2022) and subsequent mediation (June–November 2023) were within the prescribed period.
   • The time spent in bona fide mediation was excluded from the limitation period, making the petition timely.
2. Nature of Prior Correspondence:
   • Earlier letters from Flemingo (2017–2018) were not formal notices invoking arbitration but requests for amicable resolution.
   • The actual invocation of arbitration occurred only after AAI’s formal rejection in 2021.
3. Referral Court’s Limited Role:
   • The court reaffirmed that it should not conduct a detailed inquiry into the merits or arbitrability of claims at the Section 11 stage.
   • All such issues are to be determined by the appointed arbitrator.

Outcome and Directions

• The court appointed Ms. Justice Shalinder Kaur (Retd.) as the Sole Arbitrator.
• Arbitration will proceed under the Delhi International Arbitration Centre (DIAC) rules.
• All rights and contentions of the parties, including arbitrability and merits, are left open for the arbitrator’s determination.

Significance of the Judgment

• Clarifies Limitation Law: The judgment clarifies when the limitation period starts for arbitration petitions and the effect of mediation on limitation.
• Reinforces Party Autonomy: Emphasizes minimal court interference in arbitration, supporting party autonomy and efficient dispute resolution.
• Guidance for Future Disputes: Provides a template for handling similar contractual and arbitration disputes in the infrastructure and aviation sectors.

Conclusion

The Delhi High Court’s decision in the Flemingo (DFS) vs. AAI case underscores the importance of clear contractual terms, timely invocation of arbitration, and the limited role of courts at the referral stage. The judgment ensures that substantive disputes are resolved by arbitrators, promoting efficiency and fairness in commercial dispute resolution.

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Source: Delhi High Court

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