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2017 (3) TMI 692 - SC - Indian LawsAward made by the respondent under Section 34 of the Arbitration Act maintainable before a court in India - Held that - We find that in the present case, the seat of arbitration has not been specified at all in the arbitration clause. There is however an agreement to have the arbitration conducted according to the ICC rules and thus a willingness that the seat of arbitration may be outside India. In any case, the parties having agreed to have the seat decided by the ICC and the ICC having chosen London after consulting the parties and the parties having abided by the decision, it must be held that upon the decision of the ICC to hold the arbitration in London, the parties agreed that the seat shall be in London for all practical purposes. Therefore, there is an agreement that the arbitration shall be held in London and thus Part-I of the Act should be excluded. It is settled law in India that the provisions of Part-I of the Arbitration Act would apply to all arbitrations and all proceedings relating thereto. On a true construction of Clause 14 in this case, there is no doubt the parties have agreed to exclude Part-I by agreeing that the arbitration would be conducted in accordance with the ICC Rules. The parties were undoubtedly conscious that the ICC could choose a venue for arbitration outside India. That in our view is sufficient to infer that the parties agreed to exclude Part-I. The ICC could well have chosen a venue in India. The possibility that ICC could have chosen India is not a counter indication of this inference. It could also be said that the decision to exclude the applicability of Part-I was taken when the ICC chose London after consulting the parties. Either way Part-I was excluded. The view that it is the law of the country where arbitration is held that will govern the arbitration and matters related thereto such as a challenge to the award is well entrenched. The relationship between the seat of arbitration and the law governing arbitration is an integral one. The seat of arbitration is defined as the juridical seat of arbitration designated by the parties, or by the arbitral institution or by the arbitrators themselves as the case may be. Therefore, the two reasons for Part-I not being applicable are as follows - (i) Parties agreed that the seat maybe outside India as may be fixed by the ICC; and (ii) It was admitted that the seat of arbitration was London and the award was made there. Therefore, there is no doubt that Part-I has no application because the parties chose and agreed to the arbitration being conducted outside India and the arbitration was in fact held outside India. In view of the foregoing observations, we find that the High Court committed an error in observing that the seat of arbitration itself is not a decisive factor to exclude Part-I of the Arbitration Act. We therefore set aside the judgment of the High Court and dismiss the petition filed by the respondent under Section 34 of the Arbitration Act before the Bombay High Court.
Issues Involved:
1. Maintainability of the petition under Section 34 of the Arbitration and Conciliation Act, 1996 before an Indian court. 2. Applicability of Part-I of the Arbitration and Conciliation Act, 1996. 3. Jurisdiction and governing law of the arbitration agreement. Detailed Analysis: 1. Maintainability of the Petition Under Section 34: The primary issue before the Supreme Court was whether the petition under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act) was maintainable before the Bombay High Court. The High Court had held that the petition challenging the arbitral awards was maintainable. The appellant contended that the arbitration clause excluded the applicability of Part-I of the Arbitration Act, which contains Section 34. The Supreme Court needed to determine if the challenge to the award under Section 34 was permissible in India, given the arbitration's seat in London. 2. Applicability of Part-I of the Arbitration Act: The arbitration agreement between the parties specified that the agreement would be governed by Singaporean law and disputes would be settled by arbitration under the ICC Rules. The ICC fixed London as the juridical seat of arbitration. The Supreme Court noted that the ICC Rules allow the court to fix the seat of arbitration, and in this case, London was chosen. The Court emphasized that the choice of London as the seat of arbitration implied that the arbitration would be governed by English law, thereby excluding the applicability of Part-I of the Arbitration Act. The Court referred to several precedents, including Bhatia International vs. Bulk Trading S.A., Venture Global Engg. vs. Satyam Computer Services Ltd., and others, which supported the view that Part-I of the Arbitration Act would apply to international commercial arbitrations held outside India unless expressly excluded by the parties. The Court concluded that the parties' agreement to arbitration under the ICC Rules and the ICC's decision to hold the arbitration in London indicated an intention to exclude Part-I of the Arbitration Act. 3. Jurisdiction and Governing Law of the Arbitration Agreement: Clause 14 of the agreement specified that the agreement would be governed by Singaporean law and disputes would be settled by arbitration under the ICC Rules. The Supreme Court interpreted this clause to mean that the substantive law governing the contract was Singaporean law, while the procedural law governing the arbitration was English law, due to the seat of arbitration being in London. The Court emphasized that the seat of arbitration determines the law applicable to the arbitration proceedings and related matters, such as challenges to the award. The Court cited Redfern and Hunter on International Arbitration, which states that the place of arbitration is not merely a geographical location but a legal framework within which the arbitration is conducted. The Court also noted that the respondent had acknowledged the seat of arbitration as London in their application before the ICC. This admission further supported the conclusion that the parties intended to exclude Part-I of the Arbitration Act. Conclusion: The Supreme Court held that the High Court erred in holding that the seat of arbitration was not decisive in excluding Part-I of the Arbitration Act. The Court set aside the High Court's judgment and dismissed the petition filed by the respondent under Section 34 of the Arbitration Act before the Bombay High Court. The appeal was allowed, and no order as to costs was made.
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