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2020 (5) TMI 711 - HC - Indian LawsMaintainability of petition - Seeking interim reliefs on account of indirect/direct alleged breach of certain clauses of the Joint Venture Agreement and Licence and Technical Assistance Agreement - petition is barred by principles of Section 9(3) of Arbitration and Conciliation Act, 1996 or not - HELD THAT - Perusal of the arbitration clause shows that the parties were ad idem that in' case respondent no. 1 initiated the arbitration, then the arbitration would be held in India and under the Commercial Rules of India Commercial Arbitration Association. However, arbitration would be held in Japan and under the Rules of Japan Commercial Arbitration Association (JCAA), in case it was initiated by M/s. Jay Industries. In the present case, it is undisputed that it is an international commercial arbitration and that the emergency arbitration and regular arbitration were invoked by the Indian entity. Hence, the seat of arbitration is Japan and the rules applicable are those of the JCAA. The Constitution Bench of Supreme Court in the case of BHARAT ALUMINIUM CO VERSUS KAISER ALUMINIUM TECHNICAL SERVICE, INC AND OTHERS 2012 (9) TMI 912 - SUPREME COURT prospectively overruled the decision in Bhatia International and held that Parti of the Act would not apply in cases of international arbitration where the seat of arbitration is outside India. Pursuant to the 246th Report of the Law Commission, the Arbitration and Conciliation (Amendment) Ordinance, 2015 was promulgated, which was published in the Gazette of India on 23rd October, 2015 and came into effect immediately. The Arbitration and Conciliation (Amendment) Act, 2015 (hereinafter referred to as 'the Amendment Act') brought about various amendments in the Act, one of them being enactment of Section 2(ii) whereby Section 2(2) was amended by inserting a proviso. Provisions of Sections 9, 27 and 37(1)(a) and 37(3) of the Act were made applicable to international commercial arbitration where the place of arbitration is outside India and the arbitral award is enforceable under the provisions of Part II of the Act, subject, however, to an agreement to the contrary. Thus, in effect, the position in law went back to the stage prior to the decision in the case of BALCO - In view of the amendment to Section 2(2), it is clear that Section 9 of the Act, with which the present petition is concerned, is applicable even to international commercial arbitration held outside India, provided its applicability has not been excluded by-the parties by an agreement to the contrary. Even on the anvil of doctrine of election, applicants have to fail. Applicants had consciously chosen to tread on a path and cannot turn around only because they were unsuccessful. It also needs a mention that the pleadings in the petition are really in the nature of an appeal pointing out flaws and infirmities in the order of the emergency arbitrator. Respondents are right that this court in a petition under Section 9 of the Act cannot sit as a court of appeal to examine the order of the emergency arbitrator. Petition is not maintainable in this court and is accordingly dismissed.
Issues Involved:
1. Exemption from filing legible documents. 2. Exemption in filing process/procedures due to COVID-19 lockdown. 3. Interim reliefs under Section 9 of the Arbitration and Conciliation Act, 1996. 4. Alleged breaches of Joint Venture Agreement (JVA) and Licence and Technical Assistance Agreement (LTAA). 5. Maintainability of the petition under Section 9 of the Act. 6. Locus standi of the applicants. 7. Applicability of Section 9 in international commercial arbitration with a seat outside India. Detailed Analysis: 1. Exemption from Filing Legible Documents: - The court allowed the exemption from filing legible documents, subject to all just exceptions, and disposed of the application. 2. Exemption in Filing Process/Procedures Due to COVID-19 Lockdown: - The court directed the applicants to file duly signed and affirmed affidavits and pay the requisite court fee within a week of lifting the lockdown, and disposed of the application. 3. Interim Reliefs Under Section 9 of the Arbitration and Conciliation Act, 1996: - The applicants sought interim reliefs under Section 9 of the Act due to alleged breaches of the JVA and LTAA. - The reliefs included restraining the respondents from pursuing actions related to an open offer to purchase shares, and other interim measures to protect the applicants' interests. 4. Alleged Breaches of JVA and LTAA: - The applicants argued that the respondents breached several clauses of the JVA and LTAA, including: - Clause 4.1 (pre-emptive offer before transfer of shares). - Clause 7.1 (non-assignment without prior written consent). - Clause 1.1 (change of control). - Clause 26.1 of LTAA (restriction on assignment without prior written consent). 5. Maintainability of the Petition Under Section 9 of the Act: - The court examined whether the petition was maintainable under Section 9 of the Act, considering the arbitration clause and the JCAA Rules. - The court noted that the arbitration was to be held in Japan under the JCAA Rules, which provide a detailed mechanism for interim and emergency measures. - The court referred to the Supreme Court's decision in Bhatia International vs. Bulk Trading SA and Bharat Aluminium Co. Ltd. vs. Kaiser Aluminium Technical Services, Inc. (BALCO), which clarified the applicability of Part I of the Act to international arbitrations held outside India. - The court concluded that the parties had excluded the applicability of Part I of the Act by agreeing to be governed by the JCAA Rules, which provide for emergency measures deemed to be interim measures granted by the arbitral tribunal. 6. Locus Standi of the Applicants: - The respondents challenged the locus standi of applicant no. 1, arguing that he was not a signatory to the JVA or JV and had no arbitration agreement with the respondents. - The court noted that the settlement deed provided that shares of applicant no. 2 would pass to applicant no. 1 only after the death of Minda, who was still alive. - The court did not decide on the locus standi, stating that the arbitral tribunal would decide the matter uninfluenced by this order. 7. Applicability of Section 9 in International Commercial Arbitration with a Seat Outside India: - The court referred to the amended Section 2(2) of the Act, which allows the applicability of Section 9 to international commercial arbitration held outside India, subject to an agreement to the contrary. - The court found that the parties had impliedly excluded the applicability of Section 9 by agreeing to the JCAA Rules, which provide for emergency measures. - The court distinguished the present case from Raffles Design International India Pvt. Ltd. vs. Educomp Professional Education Ltd., noting that in Raffles, the SIAC Rules permitted parties to approach courts for interim relief, which was not the case here. Conclusion: - The court dismissed the petition as not maintainable under Section 9 of the Act, emphasizing that the parties had excluded the applicability of Part I of the Act by agreeing to the JCAA Rules. - The court clarified that nothing in the judgment was an expression on the merits of the case, including the locus standi of the applicants, and that the arbitral tribunal would decide the matter uninfluenced by this order.
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