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Issues Involved:
1. Jurisdiction of the Indian Court to entertain an application for setting aside the impugned partial award. 2. Maintainability of the application under Section 34 of the Arbitration and Conciliation Act, 1996. Detailed Analysis: Issue 1: Jurisdiction of the Indian Court to entertain an application for setting aside the impugned partial award The appeal was filed under Section 37 of the Arbitration and Conciliation Act, 1996, read with Section 96 of the Code of Civil Procedure, against the judgment of the District Judge, Bhavnagar, which rejected the application to set aside the "First Partial Award" of the International Court of Arbitration of the International Chamber of Commerce (I.C.C.). The main contention was that the arbitral tribunal's decision on jurisdiction could not be challenged under Section 34 of the Act. The agreement between the parties included an arbitration clause specifying that disputes would be settled by arbitration under the I.C.C. Rules, with the place of arbitration being London, and the agreement governed by Indian law. The arbitration proceedings commenced in India, but LURGI invoked arbitration under the initial agreement, leading to the impugned partial award. The Court held that the Indian Court has jurisdiction to entertain an application under Section 34 for setting aside the award, as the proper law governing the arbitration was Indian law. The Court referred to the Supreme Court judgments in NTPC v. Singer Company and Bhatia International v. Bulk Trading SA, which established that the provisions of the Arbitration Act apply to international commercial arbitration and that the Indian courts have jurisdiction over such matters. The Court noted that the term "arbitral award" in Section 34 does not specify "domestic" or "foreign" awards, indicating that the recourse to a Court against any award is permissible. The omission of territorial scope in Section 34, unlike the UNCITRAL Model Law, suggests a conscious decision to allow recourse against any award, whether made in India or abroad. Issue 2: Maintainability of the application under Section 34 of the Act The Court examined whether the partial award, which decided the jurisdictional issue, could be challenged under Section 34. It was argued that the partial award was final on the jurisdictional issue and had all the attributes of an award under Section 31 of the Act. However, the Court distinguished between an "award" and a "decision" or "order" on jurisdictional issues. The Court referred to the scheme of Sections 16 and 37 of the Act, which allows the arbitral tribunal to rule on its own jurisdiction. If the tribunal rejects the plea of lack of jurisdiction, it must continue with the proceedings and make an arbitral award, which can then be challenged under Section 34. The decision rejecting the plea is considered an "order" or "decision," not an "award." The Court held that the impugned decision could be challenged when recourse is taken against the final arbitral award made after the continuation of proceedings. This interpretation aligns with the legislative intent to minimize judicial intervention during arbitration and to ensure speedy resolution of disputes. The Court also noted that the parties' agreement to arbitrate under I.C.C. Rules did not waive the right to challenge the award under Section 34, as the Act, including Part I, applies to the arbitration in question. The award, made under Part I, is considered a domestic award, even if made abroad according to I.C.C. Rules. Conclusion: The Court concluded that the Indian Court has jurisdiction to entertain the application under Section 34, but the application to set aside the partial award was not maintainable. The appeal was dismissed, and the interim relief was vacated. The Court emphasized the importance of minimizing unnecessary litigation and the need for legislative clarity to avoid such disputes.
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