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2018 (11) TMI 366 - HC - Indian LawsChallenge to Arbitral Award - Jurisdiction of Court - award being a foreign award and the juridical seat of arbitration being outside India - law governing the arbitration agreement being Foreign Law - whether the award passed by the Arbitral Tribunal could be challenged in this Court under Section 34 of the Act? Held that - The arbitration award under Section 31(3) of the Act is required to be a reasoned award unless the parties agree otherwise or is an award that is passed on agreed terms as contemplated under Section 30. It is not in dispute that the impugned award was passed by the Arbitral Tribunal by applying the provisions of the Commercial Arbitration Rules of the American Arbitration Association. This being the case, we find that Mr Chinoy is correct in submitting that the Federal Arbitration Act was ipso jure the law applicable to the arbitration / arbitration proceedings. Rule 52(c) clearly stipulates that the parties to an arbitration shall be deemed to have consented that the judgment upon the arbitration award may be entered in any federal or state court having jurisdiction thereof. Having consented and submitted to the jurisdiction of U.S. Law, it is not correct in submitting that the arbitration award is governed by the Laws of India. On a plain reading of clause 15, it is clear that the place of arbitration referred to in clause 15 is the seat of arbitration. The parties expressly chose to have the place of arbitration in New York. This being the case, juridical seat of arbitration was New York. In fact, the appellant themselves invoked arbitration and submitted themselves to the jurisdiction of New York. This being the case, it is not correct to hold that the place of arbitration referred to in clause 15 was merely a venue and not a seat of arbitration. Once the juridical seat of arbitration is outside India, and also the law governing the arbitration agreement is Foreign Law, then clearly, Part-I of the Arbitration and Conciliation Act, 1996 is impliedly excluded - the learned Single Judge was absolutely correct in holding that the award passed by the Arbitral Tribunal, in the facts and circumstances of the present case, could not be challenged before this Court, under Section 34 of the Act. Appeal dismissed.
Issues Involved:
1. Jurisdiction of the High Court to entertain a petition under Section 34 of the Arbitration and Conciliation Act, 1996. 2. Determination of the juridical seat of arbitration. 3. Governing law of the arbitration agreement. Detailed Analysis: 1. Jurisdiction of the High Court to entertain a petition under Section 34 of the Arbitration and Conciliation Act, 1996: The appeal challenges the decision of the learned Single Judge, who dismissed the Arbitration Petition under Section 34 of the Act on the grounds that the High Court lacked jurisdiction. The respondents argued that the award was a foreign award, with the juridical seat of arbitration outside India, and the arbitration agreement governed by foreign law, thus implying the exclusion of Part-I of the Act. The learned Single Judge upheld this preliminary objection, leading to the dismissal of the petition. 2. Determination of the juridical seat of arbitration: The arbitration clause (Clause 15) in the Escrow Agreement specified that the arbitration would be conducted according to the Commercial Arbitration Rules of the American Arbitration Association, with the place of arbitration being New York, New York, or another agreed place. The appellant initiated arbitration in New York, and the arbitration was conducted and the award rendered there. The court concluded that the place of arbitration mentioned in Clause 15 was the juridical seat, making New York the seat of arbitration. This was consistent with the Supreme Court's interpretation in several cases, including Roger Shashoua and EITZEN Bulk, which held that the choice of a place of arbitration brings with it the application of the law of that place. 3. Governing law of the arbitration agreement: Clause 16 of the Escrow Agreement stated that the agreement would be governed by Indian law, except for certain clauses governed by New York law. The appellant argued that the arbitration agreement (Clause 15) was governed by Indian law. However, the court found that the arbitration agreement, though part of the main contract, is a separate agreement. Clause 15 specified that the arbitration would follow the Commercial Arbitration Rules of the American Arbitration Association, implying the application of U.S. law to the arbitration proceedings. The appellant's conduct, including reliance on the Federal Arbitration Act and New York law during arbitration, further indicated that the arbitration agreement was governed by U.S. law. Conclusion: The court concluded that: - The juridical seat of arbitration was New York. - The arbitration agreement was governed by U.S. law. - Part-I of the Arbitration and Conciliation Act, 1996, was impliedly excluded. Thus, the High Court lacked jurisdiction to entertain the petition under Section 34 of the Act, leading to the dismissal of the appeal. The court emphasized that the parties' choice of the place of arbitration and the governing law of the arbitration agreement are crucial in determining jurisdiction and applicable law.
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