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TMI Blog2007 (5) TMI 560X X X X Extracts X X X X X X X X Extracts X X X X ..... n with respect to the existence or validity of the arbitration agreement, an arbitration clause which forms part of the contract, has to be treated as an agreement independent of the other terms of the contract; and a decision that the contract is null and void shall not entail ipso jure the invalidity of the arbitration clause. The first contention is, therefore, liable to be rejected. Merely because the parties have agreed that the venue of arbitration shall be Hong Kong, it does not follow that Laws in force in Hong Kong will apply. The arbitration clause states that the Arbitration and Conciliation Act, 1996 (an Indian Statute) will apply. Therefore, the said Act will govern the appointment of arbitrator, the reference of disputes an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n terms of the contract in spite of several reminders and ultimately refused to take delivery of the cargo; that in view of breach by the respondent, the petitioner had to sell the cargo at Rs.1010/- per MT (as against the contract price of Rs.2190/-) incurring a loss of Rs.1180/- per MT; that it had to incur storage charges for storing the cargo for more than five months; that it had to incur freight charges for moving a part of the cargo from Karwar Port to Mangalore Port; that the amount invested in the cargo was locked up for considerable period involving loss of interest on the value; and that as a consequence, respondent is liable to pay a sum of Rs.11,50,57,488/- (= US $26,27,568). The alleged refusal/repudiation by the respondent ga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion to appoint an arbitration. The arbitration agreement requires that the disputes to be referred and resolved at Hong Kong. Therefore, the law of arbitration, as in force in Hong Kong, will govern the arbitration. Consequently, the reference to "Arbitration and Conciliation Act, 1996" in clause 17, is meaningless and redundant. As per the Hong Kong law, the Arbitrator can be appointed only by the Hong Kong International Arbitration Centre. 5. On the aforesaid contentions, the following questions arise for consideration: (i) Whether an arbitration clause comes to an end, if the contract containing such arbitration agreement, was abrogated? (ii) Whether section 11 of the Act is inapplicable in regard to the arbitrations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the arbitration clause. The first contention is, therefore, liable to be rejected. Re : Points (ii) and (iii) 7. Part I of the Act deals with Arbitration. Part-II deals with enforcement of certain foreign awards. Sub-section (2) of section 2 provides that Part I of the Act dealing with Arbitration shall apply where the place of arbitration is in India. Section 11 dealing with appointment of arbitrators is contained in Part I. As the venue of arbitration is outside India, it is contended by respondent that entire Part I including section 11 will not apply and therefore neither the Chief Justice of India nor his designate will have the jurisdiction to appoint the arbitrator. Such a contention is already considered and negatived by thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I apply to international commercial arbitrations held out of India, the intention of the legislature appears to be to allow parties to provide by agreement that Part I or any provision therein will not apply\005\005.. Where such arbitration is held in India the provisions of Part I would compulsorily apply and parties are free to deviate only to the extent permitted by the derogable provisions of Part I. In cases of international commercial arbitrations held out of India provisions of Part I would apply unless the parties by agreement, express or implied, exclude all or any of its provisions. In that case the laws or rules chosen by the parties would prevail. Any provision, in Part I, which is contrary to or excluded by that law or rules w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause makes it clear that the matter in dispute shall be referred to and finally resolved by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (or any statutory modification, enactment or amendment thereof) and the venue of arbitration shall be Hong Kong. This interpretation does not render any part of the arbitration clause, meaningless or redundant. Merely because the parties have agreed that the venue of arbitration shall be Hong Kong, it does not follow that Laws in force in Hong Kong will apply. The arbitration clause states that the Arbitration and Conciliation Act, 1996 (an Indian Statute) will apply. Therefore, the said Act will govern the appointment of arbitrator, the reference of disputes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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