Delhi High Court Refers Flemingo-AAI Dispute To Arbitration, Says Conditional Notice Is Not Invocation

The Delhi High Court on 7 September referred a dispute between Flemingo (DFS) Private Limited and the Airports Authority of India (AAI) concerning the operation of duty-free shops at Amritsar Airport to arbitration.

Justice Jasmeet Singh appointed Justice Shalinder Kaur (Retd.) as the sole arbitrator to adjudicate the disputes, holding that Flemingo's earlier communications did not amount to invocation of arbitration and that its petition under Section 11(6) of the Arbitration and Conciliation Act, 1996 was within limitation. The Bench observed:

“In the present case, the notices, which are allegedly the notices invoking arbitration, when read in totality, show that the petitioner is seeking resolution of its grievances and specifically states that in the event the grievances of the petitioner remain unresolved, the petitioner will resort to arbitration and had not invoked Arbitration at that point. Thus, the said notices cannot be construed as notices invoking Arbitration and are merely a communication that enumerates the intention of the petitioner to amicably solve the dispute without resorting to the arbitral clause as envisaged in the Agreement.The notices clearly show that there was no quantification or demand by the petitioner or any rejection of claim by the respondent.”

The dispute arose from Flemingo's operation of two duty-free shops at Amritsar Airport.

The Airports Authority of India awarded Flemingo a licence through a Letter of Award dated 10 June 2009, followed by a Licence Agreement dated 30 September 2011 for a five-year period commencing from 10 June 2009. Flemingo was allotted space in the arrival and departure areas and the agreement contained an arbitration clause. Disputes subsequently arose over excess licence fees and Minimum Annual Guarantee charges.

Flemingo sent communications dated 5 July 2017, 16 November 2017, 10 January 2018 and 9 April 2018 seeking resolution of its grievances and stating that it would request reference to arbitration if the grievances remained unresolved. AAI relied on these communications to contend that Flemingo had already invoked arbitration and subsequently abandoned the process. Flemingo maintained that the communications were only attempts to resolve the dispute amicably.

AAI considered Flemingo's claims internally on 28 September 2021 and formally rejected them for the first time on 11 October 2021. Flemingo then issued a legal notice invoking arbitration on 14 March 2022.

Subsequently, the AAI suggested mediation under its Mediation Policy, 2022. The parties participated in mediation from 30 June 2023 to 23 November 2023, but failed to reach a settlement.

After the mediation failed and AAI did not complete the appointment process, Flemingo approached the High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996, which empowers the Court to appoint an arbitrator when the agreed appointment procedure fails.

AAI opposed the petition, arguing that it was barred by limitation because Flemingo had allegedly invoked arbitration through its earlier communications. It also contended that Flemingo's claim relating to Minimum Annual Guarantee or concession fees did not arise from the 2011 Licence Agreement and therefore fell outside the arbitration clause.

The Court rejected the limitation objection, holding that the 2017 and 2018 communications did not amount to an invocation of arbitration but only expressed Flemingo's intention to resort to arbitration if its grievances remained unresolved.

It held that 11 October 2021, when AAI first rejected Flemingo's claims, was the relevant “breaking point”. Flemingo's arbitration notice dated 14 March 2022 was therefore within limitation.

The Bench also held that the 147 days spent in bona fide mediation between 30 June 2023 and 23 November 2023 had to be excluded while calculating limitation. After excluding this period, Flemingo's petition filed on 20 May 2025 was within time.

On AAI's objection concerning the Minimum Annual Guarantee claim, it held that determining whether the claim formed part of the Licence Agreement would require examination of the agreement, the parties' conduct and evidence. It held that these issues fell within the arbitrator's domain.

Accordingly, the High Court allowed the petition and appointed Justice Shalinder Kaur (Retd.) as the sole arbitrator. The arbitration will be conducted under the aegis and rules of the Delhi International Arbitration Centre. Questions concerning arbitrability, preliminary objections, claims, counterclaims and the merits have been left open for adjudication by the arbitrator.

Appearances for petitioner (Flemingo (DFS) Private Limited): Advocates Achint Singh Gyani.

Appearances for respondent (Airports Authority of India): Advocates Digvijay Rai, Standing Counsel, Archit Mishra, Sachin Yadav, Ravinder Sulkhian, Ayush Annand.