2014 (4) TMI 608 - SC - Companies Law

Jurisdiction of court - petition under Section 34 - International commercial award of an arbitral tribunal constituted by the Refined Sugar Association, London - Held that - Since one of the terms and conditions of the agreement makes the contract subject to the Rules of the Refined Sugar Association, London by treating the same to have been expressly inserted in the agreement, Rule 8 of the Refined Sugar Association, London leaves no manner of doubt that the parties have not only accepted English law as the law governing the contract but the disputes and the arbitration shall also be governed by the law of England. The seat of Arbitration is admittedly England - arbitration clause is not strictly the same as recommended by the Refined Sugar Association, London which clearly stipulated that the arbitration shall be conducted in accordance with the English law. But this does not take us far. The condition that the contract is subject to the Rules of the Refined Sugar Association, London which stand inserted in the contract and wordings of Rule 8 clinch the relevant issue in favour of the respondent - Decided in favour of appellant.

Summary

Issues:
Jurisdiction of Indian courts in challenging international commercial arbitration award under Section 34 of the Arbitration and Conciliation Act, 1996.

Analysis:
The Supreme Court analyzed the impugned judgment of the High Court of Bombay in Appeal No. 337 of 2013 under Section 37 of the Arbitration and Conciliation Act, 1996. The Court concluded that the High Court's order correctly determined that Indian courts lack jurisdiction to entertain a petition under Section 34 challenging an international commercial award of an arbitral tribunal constituted by the Refined Sugar Association, London. The Court referred to the case of Bharat Aluminium Company vs. Kaiser Aluminium Technical Services Inc., which overruled the earlier judgment in Bhatia International vs. Bulk Trading S.A., establishing that Part I of the Act does not apply to international commercial arbitration held outside India. However, in this case, the agreement between the parties subjected the arbitration to the law decided in Bhatia International, making Part I applicable unless expressly excluded by the parties.

The Court highlighted the terms and conditions of the agreement between the parties, emphasizing the clause subjecting the contract to the Rules of the Refined Sugar Association, London. The arbitration agreement mandated that all disputes be referred to the Refined Sugar Association, London, for settlement in accordance with English law. The final award challenged under Section 34 was deemed to fall under the jurisdiction of English law due to the agreement's terms and conditions, including Rule 8 of the Rules of the Refined Sugar Association, London, which specified England as the seat of arbitration and the governing law.

The Court dismissed the petitioner's argument that the arbitration clause did not strictly adhere to the Refined Sugar Association's recommendations, as the contract's terms unequivocally subjected the agreement to the Rules of the Refined Sugar Association, London. The Court found no merit in the petition challenging the international commercial arbitration award and dismissed it without costs.