2016 (1) TMI 1042 - SC - Indian Laws

Challenge to foreign awards - International commercial arbitrations - Scope of agreement executed outside India - Held that - It is clear that the law applicable to arbitration agreement in the present case is English Law. Once it is found that the law governing the arbitration agreement is English Law, Part I of the Indian Arbitration Act stands impliedly excluded. - the applications filed by the appellant under Section 34 of the Indian Act are not maintainable against the two foreign awards dated 10.11.2002 and 12.11.2002 between the appellant and the respondent. - Decided against the appellant.

Summary

Issues:
1. Applicability of Part I of Arbitration and Conciliation Act, 1996 to international commercial arbitrations held outside India.
2. Exclusion of Part I of the Arbitration Act by parties in the arbitration agreement.
3. Determination of proper law governing the arbitration agreement.

Analysis:

1. The main issue in this case revolves around the applicability of Part I of the Arbitration and Conciliation Act, 1996 to international commercial arbitrations held outside India. The Supreme Court clarified that Part I is only applicable to arbitrations within the territory of India, overruling the decision in Bhatia International v. Bulk Trading S.A. The Court held that agreements executed prior to 06.09.2012 would be governed by the Bhatia International decision.

2. The Court focused on whether the parties had excluded Part I of the Arbitration Act in their arbitration agreement. The agreement in question specified that the arbitration proceedings would be conducted pursuant to English Arbitration Law, indicating an express agreement to exclude the application of Indian law. The Court emphasized the importance of party autonomy in determining the governing law for arbitration agreements.

3. In determining the proper law governing the arbitration agreement, the Court analyzed the specific clauses of the agreement. Article 22 of the agreement clearly stated that the proper law of the contract would be Indian law, while English Law would apply to the arbitration process. The Court emphasized the need to interpret the agreement based on the parties' intentions and the context of the contract.

4. The Court referenced previous judgments and legal principles to support its interpretation of the arbitration agreement. It highlighted the significance of the parties' choice of law and the implications of such choices on the applicability of Part I of the Indian Arbitration Act. The Court reaffirmed that when the law governing the arbitration agreement is not Indian law, Part I of the Arbitration Act is impliedly excluded.

5. Ultimately, the Court dismissed the appeals, upholding the High Court's decision that the applications filed under Section 34 of the Indian Act were not maintainable against the foreign awards. The Court concluded that the arbitration agreement in this case was governed by English Law, thereby excluding the application of Part I of the Indian Arbitration Act.