2001 (2) TMI 971 - SC - Companies Law

Whether a decision regarding the venue of the arbitration proceedings could be assailed in appeal under section 34 of the Arbitration and Conciliation Act 1996? Whether the decision of the Joint Arbitration Committee dated 15-7-1998 can be held to be an interim award? Held that - Appeal dismissed. The ultimate arbitral award could be assailed on the grounds indicated in sub-section (2) of section 34 and an erroneous decision on the question of venue which ultimately affected the procedure that has been followed in the arbitral proceeding could come within the sweep of section 34(2) and as such it cannot be said that an aggrieved party has no remedy at all.

Summary

Issues Involved:
1. Whether a decision regarding the venue of the arbitration proceedings can be assailed in appeal under section 34 of the Arbitration and Conciliation Act, 1996.

Detailed Analysis:

1. Venue Decision and Section 34 Appeal:
The primary issue in this case is whether the decision regarding the venue of arbitration proceedings can be challenged under section 34 of the Arbitration and Conciliation Act, 1996. The appellant contended that the decision on the venue is crucial as it determines the procedural rules applicable to the arbitration, thus it should be considered an interim award and be appealable under section 34. The respondent argued that the venue decision is not an award but a preliminary step in the arbitration process and thus not subject to appeal under section 34.

2. Technical Collaboration Agreement and Arbitration Clause:
The appellant and respondent No. 1 entered into a technical collaboration agreement on 1-8-1989. Disputes arose, leading respondent No. 1 to file a statement of claim before respondent No. 2, which called upon the appellant to appoint an arbitrator. The appellant objected to the jurisdiction and the venue decision, leading to the involvement of a Joint Arbitration Committee to decide the venue.

3. Interpretation of Clause 8.4:
Clause 8.4 of the agreement stipulates that disputes shall be settled by arbitration, with the venue determined by a Joint Arbitration Committee if parties cannot agree. The appellant argued that the venue decision affects the procedural rules and thus constitutes an interim award. The respondent countered that the venue decision is a preliminary administrative step and not a final determination of any substantive rights, thus not an award.

4. Definition and Scope of 'Award':
The Court examined the definition of 'award' under section 2(c) of the Act, which includes an interim award. The Court noted that for a decision to be an award, it must be a final determination of a particular issue or claim in the arbitration. The venue decision by the Joint Arbitration Committee does not meet this criterion as it is an administrative determination, not a resolution of any substantive dispute.

5. Legal Framework and Interpretation:
The Court analyzed sections 2(6) and 20 of the Act, which allow parties to determine certain issues, including the venue, and authorize an institution to make such determinations. The Court concluded that the Joint Arbitration Committee's decision on the venue is an administrative determination under the parties' agreement and does not constitute an award or interim award under the Act.

6. Judicial Precedents and Interpretation:
The Court referred to the case of K.K. Modi v. K.N. Modi, which outlined attributes of an arbitration agreement and concluded that the Joint Arbitration Committee's decision on the venue does not satisfy these attributes and thus cannot be considered an arbitration agreement or an award.

7. Practical Implications and Remedies:
The Court acknowledged the importance of the venue decision as it affects the procedural rules but clarified that any procedural errors arising from the venue decision could be challenged as part of an appeal against the final arbitral award under section 34(2).

Conclusion:
The Court dismissed the appeal, holding that the decision of the Joint Arbitration Committee regarding the venue of arbitration is not an interim award and thus not appealable under section 34 of the Arbitration and Conciliation Act, 1996. The appellant's concerns about procedural rules can be addressed in an appeal against the final award.