1997 (12) TMI 598 - SC - Companies Law

Whether a dispute lies within the scope of the arbitration agreement? Held that - By reason of Section 9(b), the 1961 Act does not apply to any award made on an arbitration agreement governed by the law of India. The 1961 Act, therefore, does not apply to the arbitration agreement between the appellant and the first respondent. The 1940 Act, applies to it and, by reason of Section 14(2) thereof, the courts in India are entitled to receive the award made by the second respondent. We must add in the interests of completeness that is not the case of the appellant that the High Court at Bombay lacked the territorial jurisdiction to do so. In the result, the appeal must fail, and it is dismissed with costs.

Issues Involved:
1. Jurisdiction of High Court at Bombay to direct the filing of the arbitration award.
2. Applicability of curial law post-award.
3. Determination of the proper law governing the arbitration agreement and proceedings.

Detailed Analysis:

1. Jurisdiction of High Court at Bombay to Direct the Filing of the Arbitration Award:
The central issue in this appeal was whether the High Court at Bombay had the jurisdiction to direct the second respondent to file his arbitration award. The appellant contended that only the courts administering the curial law (English courts) had such jurisdiction. However, the court concluded that the filing and enforcement of the award are governed by the law of the arbitration agreement, which in this case is Indian law. Section 14(2) of the Indian Arbitration Act, 1940, entitles Indian courts to receive the award. The court emphasized that the curial law governs the arbitration proceedings but ceases to have effect once the award is made. The High Court at Bombay, therefore, had the jurisdiction to direct the filing of the award.

2. Applicability of Curial Law Post-Award:
The court examined the scope of curial law and its applicability post-award. It referred to various legal precedents and authoritative texts to conclude that the curial law governs the procedural aspects of the arbitration proceedings up to the making of the award. Once the award is made, the arbitrator becomes "functus officio," and the curial law ceases to apply. The enforcement or challenge of the award is governed by the law of the arbitration agreement, which, in this case, is Indian law. The court cited Mustill and Boyd, emphasizing that the curial law governs the conduct of the arbitration but not the subsequent enforcement or setting aside of the award.

3. Determination of the Proper Law Governing the Arbitration Agreement and Proceedings:
The court discussed the various laws that could potentially govern different aspects of the arbitration process:
- The proper law of the contract, which governs the substantive rights and obligations.
- The proper law of the arbitration agreement, which governs the rights and obligations arising from the agreement to arbitrate.
- The curial law, which governs the procedural conduct of the arbitration proceedings.

In this case, the contract explicitly stated that Indian law would govern the contract and the arbitration agreement (Clause 17). The court noted that the law governing the arbitration agreement and the performance of that agreement is Indian law. The Foreign Awards (Recognition and Enforcement) Act, 1961, does not apply to this case as per Section 9(b), which excludes arbitration agreements governed by Indian law. Therefore, the Indian Arbitration Act, 1940, applies, and the High Court at Bombay has jurisdiction to receive the award.

Conclusion:
The appeal was dismissed with costs, affirming that the High Court at Bombay had the jurisdiction to direct the filing of the award. The curial law ceased to apply post-award, and the enforcement and challenge of the award are governed by Indian law, as stipulated in the arbitration agreement.

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