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TMI Blog2009 (4) TMI 841X X X X Extracts X X X X X X X X Extracts X X X X ..... (hereinafter called `EC') had entered into an outsourcing agreement singed in Kolkata, India with the applicant Citation Infowares Ltd (hereinafter called `CIL') on 09.02.2004 wherein the applicant was engaged as a service provider on terms and conditions contained in the agreement. It was agreed in this agreement dated 09.02.2004 that CIL which had bagged orders from its client and since it had sufficient funds, space and existing infrastructure to execute the projects and since it required expert manpower to provide service to its client and further since CIL had approached EC for providing the required number of resources to CIL as against the monthly charges at mutually agreed consideration, EC had agreed to provide resources and, hence, both the parties had, in short, mutually agreed to do the business on certain agreed terms. The terms included that the duration of the agreement was to be for three years. There was a confidentiality clause 10. Following was the clause 10: "10. Any dispute between the parties hereto to arising from this Agreement, or from an individual agreement concluded on the basis thereof, shall be finally referred to a mutually agreed Arbitrator." 2. Tw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Section necessitating the present application for appointment of an Arbitrator by this Court since this happens to be an international arbitration. 6. There is no dispute between the parties that this is an international arbitration and, therefore, under the Arbitration Act, the Chief Justice or his nominee alone would have the jurisdiction to appoint the Arbitrator. There is also no dispute that there is a live dispute between the parties and there is an Arbitration Clause in case of dispute between the parties. 7. So far so good. However, the question that has arisen is whether this Court would have the jurisdiction, in the present factual scenario and on the backdrop of the fact that the parties vide the aforementioned clause 10.1 had agreed that the governing law would be that of California, USA. According to the applicant, it is only this Court which would have the jurisdiction to appoint the Arbitrator, while according to the respondent this Court does not have the jurisdiction to appoint the Arbitrator as the provisions of the Arbitration Act would necessarily stand excluded in view of the specific language of clause 10.1 of the agreement wherein the governing law woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itration to a mutually agreed arbitrator. The Learned Senior Counsel, therefore, urged that considering the positive language of Clause 10.1, it was clear that the parties had specifically agreed that the matter of appointment of arbitrator would also be governed by the Laws of California. The Learned Senior Counsel urged that, therefore, there was a clear cut agreement between the parties to that effect and as such, as held in Bhatia International Vs. Bulk Trading S.A. reported in 2002 (4) SCC 105 (cited supra), parties had expressly excluded the provisions of Part I of the Arbitration and Conciliation Act, 1996. The Learned Senior Counsel very heavily relied on the last part of Para 32 of the judgment in case of Bhatia International (cited supra). The learned Senior Counsel, therefore, urged that even if judgment in case of Bhatia International (cited supra) was held applicable, it was in fact, liable to be read in favour of the respondent and not the applicant. The Learned Senior Counsel also invited our attention to another judgment of this Court in National Thermal Power Corporation Vs. Singer Company & Anr. reported in 1992 (3) SCC 551 and Sumitomo Heavy Industries Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that it is fairly well settled that when an arbitration agreement is silent as to the law and procedure to be followed in implementing the arbitration agreement, the law governing the said agreement would ordinarily be the same as the law governing the contract itself. The decisions cited by Mr. Tripathi and the views of the jurists referred to in NTPC's case support such a proposition. What, however, distinguishes the various decisions and views of the authorities in this case is he fact that in Bhatia International this Court laid down the proposition that notwithstanding the provisions of Section 2(2) of the Arbitration and Conciliation Act, 1996 indicating that Part I of the said Act would apply where the place of arbitration is in India, even in respect of international commercial agreements, which are to be governed by the laws of another country, the parties would be entitled to invoke the provisions of Part I of the aforesaid Act and consequently the application made under Section 11 thereof would be maintainable. (emphasis supplied) 13. Again in paragraph 37 the Court expressed that the decision in Bhatia International's case has been rendered by a Bench of three Judges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y intention, a presumption that the parties have intended that the proper law of contract as well as the law governing arbitration agreement are the same as the law of the country in which the arbitration is agreed to be held. Here again the stress is on the agreement about the country where the arbitration is agreed to be held and precisely this situation is absent in the present case. Here the substantive law of contract governing the contract is specifically agreed upon. However, the place where arbitration would be held is not to be found in the language of Clause 10.1. Therefore, the situation in National Thermal Power Corporation's case (cited supra) was not applicable to the present case. 16. The Court undoubtedly further goes on to say that where the proper law of contract is expressly chosen by the parties such a law must, in the absence of unmistakable intention to the contrary, govern the arbitration agreement which, though collateral or ancillary to the contract, is nevertheless a part of the contract. It is this expression which has been heavily relied upon by the learned senior counsel for the respondent. 17. However, in Bhatia International (cited supra), duly cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t one of the contracting parties is the Indian party. The obligations under the contract were to be completed in India. Further considering the nature of the contract, it is difficult to read any such implied exclusion of Part I in the language of Clause 10.1. That argument of learned senior counsel for the respondent therefore must be rejected. 21. Learned senior counsel for the respondent invited attention of this Court to paragraphs 32 and 34 of Bhatia International (cited supra) and again reiterated that the implied exclusion must be read in the language of Clause 10.1. I have already however, held that considering the various factors, such exclusion cannot be read and, therefore, Bhatia International (cited supra) will have to be held applicable. 22. Identical view has been taken even in Venture Global Engineering's case (cited supra) where the Court took the view that even the foreign award could be challenged under Section 34 of the Act. This is a judgment by Two Judges Bench. The observations made in paragraphs 31, 35 and 37 are extremely apposite and binding. The comments against this judgment that it does not consider the question of implied exclusion would be of no con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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