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TMI Blog2014 (2) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... red in the absence of relevant pleadings. There is a mention in one of the e-mails that Dr. Wobben has taken advantage of his friendship with Mr. Yogesh Mehra. But that seems to be more of a sulk than a genuine grievance. - issue as to whether there is a concluded contract between the parties can be left to the Arbitral Tribunal, though not for the same reasons. The parties have irrevocably agreed to resolve all the disputes through Arbitration. Parties can not be permitted to avoid arbitration, without satisfying the Court that it would be just and in the interest of all the parties not to proceed with arbitration. Furthermore in arbitration proceedings, courts are required to aid and support the arbitral process, and not to bring it to a grinding halt. - parties must proceed with the Arbitration. All the difficulties pointed out by Mr. Rohinton Nariman can be addressed by the Arbitral Tribunal. Even if there is a valid arbitration agreement/clause, can the parties be denied the benefit of the same on the ground that it is unworkable? - Held that:- Courts have to adopt a pragmatic approach and not a pedantic or technical approach while interpreting or construing an arbitrat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in England was that the venue of the arbitration has been fixed in London. The considerations for designating a convenient venue for arbitration can not be understood as conferring concurrent jurisdiction on the English Courts over the arbitration proceedings or disputes in general. Keeping in view the aforesaid, we are inclined to restore the anti-suit injunction granted by the Daman Trial Court. - The findings recorded by the Appellate Court that the parties can proceed to arbitration are affirmed. The findings recorded by the Trial Court dismissing the Application under Section 45 are set aside. - Decided partly in favour of appellant. - C.A. 2086 OF 2014 - - - Dated:- 14-2-2014 - NIJJAR, S.S KALIFULLA, FAKKIR MOHAMED IBRAHIM ,JJ. For The Appellant : MR. N. GANPATHY For The Respondent : MS. KUM KUM SEN JUDGMENT : 1. Leave granted. 2. These civil appeals have been filed against the order and judgment dated 5th October, 2012, passed by the Bombay High Court in CWP Nos.7804 of 2009 and 7636 of 2009. The Bombay High Court by the impugned order dismissed both the aforesaid Civil Writ Petitions. 3. Appellants No.2 and 3 (members of the Mehra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .1. At this stage, there were discussions between the parties about the possibility of a further agreement which would cover future technologies developed by Respondents. On 23rd May, 2006, these negotiations were recorded in a document titled Heads of Agreement . Agreed Principles: 9. On 29th September, 2006, the Appellants and the Respondent No. 1 entered into what is known as the Agreed Principles for the use and supply of the windmill technology. The second page of the Agreed Principles, inter alia, provides as follows: The Agreed Principles as mentioned above, in their form and substance, would be the basis of all the final agreements which shall be finally executed. The agreed principles shall be finally incorporated into the A. IPLA Draft enclosed B. Successive Technology Transfer Agreement C. Name Use Licence Agreement D. Amendment to Existing Share Holding Agreement. The above agreements will be made to the satisfaction of all parties. And then shall be legally executed. IPLA (dated 29th September, 2006): 10. On the same day, i.e. 29th September, 2006, Intellectual Property License Agreement ( IPLA ) was executed between the parties. It appears that Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... flected in the documents at the time of their signing. Appellant No.2 also highlighted certain discrepancies between IPLA and the Agreed Principles. vii. 24.11.2006: E-mail sent by Ms. Fritsch to Appellant No.2, wherein she apologised for the delay in sending outstanding drafts of the Final IPLA, Shareholding Agreement, and other Successive Agreements . It was also mentioned that there are some discrepancies in the contracts and the Agreed Principles for which the Respondent has to discuss the matter internally. viii. 01.01.2007: Ms. Fritsch wrote an email to the Appellant No.2, wherein it was stated that the Respondent No.2 would be sending the revised drafts of the outstanding contracts to the Appellants, so as to let Appellant No.2 and their lawyers verify those drafts. ix. 29.01.2007: Ms. Fritsch forwarded the amended SHA of 1994, Corporate Name User Agreement, and Successive Technology Licence Agreement to Appellant No.2. x. 31.01.2007: An email was sent to Respondent No.1 by the Appellant No.1, wherein it was categorically stated that the IPLA is not a done deal, the same being not in conformity with the Agreed Principles. 11. The Appellants claim that Respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion. Arbitration Claim Form: 15. On 27th March, 2008, Arbitration Claim Form was issued by the Respondents seeking several declaratory reliefs in relation to the IPLA from the High Court of Justice, Queens Bench Division, Commercial Court, United Kingdom ( the English High Court ). The reliefs which were claimed included the constitution of Arbitral Tribunal under the IPLA. Claim form was annexed to the letter dated 2nd April, 2008 sent by the UK Solicitors of Respondent No.1 to the Appellants. 16. Meanwhile on 31st March, 2008, a letter was addressed by the Appellant No.2 on behalf of himself and Appellant No.3, in response to letter of Respondent No.1 dated 13th March, 2008, wherein it was stated that since the draft IPLA was not a concluded contract, there is no question of a valid arbitration agreement between the parties and as such, there is no question of nominating any arbitrator. 17. In response to the aforesaid, a letter was addressed by the UK Solicitors of Respondent to the Appellants on 2nd April, 2008, stating therein that in the event the Appellants do not nominate their arbitrator within 7 days of the receipt of the said letter, the Respondents shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur appeals before the District Court of Daman ( Daman Appellate Court ). Daman Appellate Court : 21. The Daman Appellate Court allowed all the appeals of the Respondents by order dated 27th August, 2009 and set aside both the orders of the Daman Trial Court. The anti-arbitration injunction was vacated, and the Application under Section 45 of the Indian Arbitration Act, 1996 was allowed. The aforesaid order dated 27th August, 2009 was challenged by the Appellants herein by filing two writ petitions before the High Court of Bombay, viz. Writ Petition No. 7636 of 2009, filed in respect of the anti- arbitration injunction and Writ Petition No. 7804 of 2009, filed in respect of Section 45 of the Indian Arbitration Act. Bombay High Court : 22. On 4th September, 2009, the Bombay High Court ordered that the status quo order dated 8th April, 2008, passed by the Daman Trial Court be continued in Writ Petition No. 7636 of 2009. On 9th September, 2009, the Bombay High Court continued the stay of the reference under Section 45 of the Indian Arbitration Act until the next date of hearing. In the course of hearing of the both writ petitions, the Bombay High Court, on 25th January, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court had not disposed of early hearing Application of the Appellants, the Appellants approached this Court by Special Leave Petitions No.11676 and 11677 of 2012 for expeditious hearing of the writ petitions. This Court vide order/judgment dated 22nd June, 2012, requested the Bombay High Court to take up the writ petitions for hearing on 2nd July, 2012. Resumption of Writ Petitions before Bombay High Court: 27. The hearing of the writ petitions in the Bombay High Court resumed on 2nd July, 2012. On 3rd July, 2012, the English High Court passed an order by consent, adjourning the Respondents Application dated 11th June, 2012, until after the Bombay High Court delivers judgment in the writ petitions, and also vacating the hearing listed for 3rd-4th July, 2012. On 5th October, 2012, the Bombay High Court dismissed the writ petitions by the order/judgment impugned before us, wherein it has been, inter alia, held as under: A. The scope of the enquiry under the Writ Petition No.7804 of 2009 is restricted to the existence of the arbitration agreement and not the main underlying contract (which can be challenged before the Arbitral Tribunal); B. Prima facie, there is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or a supervisory jurisdiction in the English Courts where the seat is not in England under the provisions of s.2(4) of the English Arbitration Act. Paragraph 60: If the Supreme Court of India were, in due course, to consider that the Bombay High Court was wrong in its conclusion as to the seat of the arbitration or that there was a prima facie valid arbitration or that the English Court had concurrent supervisory jurisdiction, it would be a recipe for confusion and injustice if, in the meantime, the English Court were to conclude that England was the seat of the putative arbitration, and to assume jurisdiction over EIL and the putative arbitration, and to conclude that there was a valid arbitration agreement, whether on the basis of a good arguable case or the balance of probabilities. Further, for it to exercise its powers, whether under s.2(1) or 2(4) or s.18 of the Arbitration Act in appointing a third arbitrator, would create real problems, should the Supreme Court decide differently. Paragraph 61: These are the very circumstances which courts must strive to avoid in line with a multitude of decisions of high authority, from the Abidin Daver (1984) AC 398 onwards, includin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t IPLA was annexed. Mr. Nariman submitted that the Agreed Principles formed the fundamental basis on which the final IPLA was to be made to the satisfaction of all parties and then to be legally finally executed . Mr. Nariman reiterated that there are certain discrepancies between the Agreed Principles and the IPLA. By its letter dated 3rd November, 2006, Appellant pointed out material discrepancies between the IPLA and the Agreed Principles. These discrepancies have been accepted to be present by the Respondents in the letter dated 24th November, 2006. In fact, the Respondents have never contended that IPLA is in accordance with the Agreed Principles. The Respondents have by their letters dated 29th October, 2006 and 24th November, 2006 accepted the primacy of the Agreed Principles. 34. Further, the Appellants have relied upon the correspondence prior and subsequent to the signing of the IPLA to demonstrate that there is no concluded contract. According to the learned senior counsel, the Respondents have deliberately not dealt with the correspondence subsequent to the IPLA except to submit that the same refers to agreements other than the IPLA. This, according to the learned s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. Ltd. Vs. Severn Trent Water Purification Inc. Ors.[ (2013) 1 SCC 641] According to Mr. Nariman, it is no longer open to contend that the question whether the contract is concluded or not can be gone into by the Arbitral Tribunal. III. Re: Un-workability of Arbitration Agreement 38. It was submitted that Clause 18.1 of the IPLA is incapable of being performed and therefore, there can be no reference to arbitration under Section 45 of the Indian Arbitration Act, 1996. It was submitted that the High Court has held that each of the licensors (Respondents) has to appoint an arbitrator and the licensee (Appellant No.1) is to appoint one arbitrator . making it in all three arbitrators . As such, the High Court has misread Clause 18.3 of the IPLA to mean that each of the licensors (Respondent No.1 and Respondent No.2) has a right to appoint an arbitrator and that the Appellant No.1 also has the right to appoint an arbitrator. The construction of Clause 18.1 of the IPLA in the aforesaid manner, according to learned senior counsel, is contrary to the expressed terms of Clause 18.1 in the light of the definition of licensor and licensors contained therein as well as cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have accepted that the choice of law of the underlying agreement is Indian. But, if venue of arbitration is to be interpreted as making London the seat of arbitration it would: (a) make the English Act applicable when it is not chosen by the parties; (b) would render the parties choice of the Indian Arbitration Act, 1996 completely nugatory and otiose. It would exclude the application of Chapter V of the Indian Arbitration Act, 1996 i.e. the curial law provisions and Section 34 of the Indian Arbitration Act, 1996. On the other hand, interpretation propounded by the Appellants would give full and complete effect to the entire clause as it stands. 41. Mr. Nariman also submitted that there are even more clear indicators within the arbitration clause which show that the parties intended to be governed only by the Indian Arbitration Act, 1996. The clause uses the word Presiding Arbitrator and not Chairman; this language is expressly used in Sections 11 and 29 of the Indian Arbitration Act, 1996 as distinct from Section 30 of the English Arbitration Act, 1996. 42. Mr. Nariman gave another reason as to why London can t be the seat of the Arbitration. According to him, if the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Universal[(2005) 7 SCC 791], in support of the submission that since Respondent No.1 has share holding in a company which has registered office within the territorial limits of the Daman Court, therefore relief can be necessarily granted to the Appellants for restraining Respondent No.1 for proceeding in the English Courts. It was also pointed out that Respondent No.1 has approached the Company Law Board under Section 397 of the Companies Act; the Delhi High Court alleging infringement of its intellectual property rights; and the Madras High Court against the orders passed by the Intellectual Property Appellate Board, revoking patents in the name of Dr. Wobben in India. Therefore, it has already submitted to the jurisdiction of Courts in India. Mr. Nariman, however, points out that in view of the orders of the English Court dated 15th February, 2013, restraining the Appellants from seeking an injunction against the Respondents save if this Court determines the seat of the arbitration is India, the Appellants shall not seek any injunction from this Court, unless this Court determines that the seat of arbitration is in India. Respondents Submissions: 47. Dr. Abhishek Manu S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecided by the Arbitral Tribunal: the question as to whether the claim is a dead claim (long- barred) or a live claim. C. The issues which the Chief Justice/his designate should leave exclusively to the Arbitral Tribunal. The question concerning the merits or any claim involved in the arbitration. 50. Dr. Singhvi then submitted that leaving aside the question of un- workability of the arbitration clause for the moment, the intention of the parties in the instant case may be determined from the following clauses of IPLA: 17 GOVERNING LAW 17.1 This Agreement and any dispute of claims arising out of or in connection with its subject matter are governed by and construed in accordance with the Law of India. 18. DISPUTES AND ARBITRATION 18.1 All disputes, controversies or differences which may arise between the Parties in respect of this Agreement including without limitation to the validity, interpretation, construction performance and enforcement or alleged breach of this Agreement, the Parties shall, in the first instance, attempt to resolve such dispute, controversy or difference through mutual consultation. If the dispute, controversy or difference is not resolved thr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, but the clause has to be seen in the manner it has been drafted. Dr. Singhvi submitted that in fact there is no mismatch between different parts of the clause. The clause, according to Dr. Singhvi, talks of three arbitrators: one by the licensee, one by the licensor. The implication is that the third one is to be appointed by the two arbitrators. Dr. Singhvi submits that the sentence the third arbitrator shall be appointed by the two arbitrators seems to have been missed out by the draftsman. This can be supplied by the Court to make the arbitration clause workable. 54. It was further submitted that the missing sentence in the arbitration clause can be supplied with the aid of some of the provisions of the Indian Arbitration Act, 1996. In this context, learned senior counsel brought to our attention Sections 10 (1) and (2) read with section 11 of the Indian Arbitration Act, 1996. Section 10 (1) and 2 read as: 10. Number of arbitrators. (1) The parties are free to determine the number of arbitrators, provided that such number shall not be an even number. (2) Failing the determination referred to in sub- section (1), the arbitral tribunal shall consist of a sole ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esign rights, copyrights, trademarks and know how relating to the Products, including but not limited to: . 3. GOVERNING LAW AND JURISDICTION 3.1 This paragraph is legally binding. 3.2 This Heads of Agreement is (and all negotiations and any legal agreement prepared in connection with IPLA shall be governed by and construed in accordance with the law of Germany. 3.3 The parties irrevocably agree that Clause 18 of the proposed draft IPLA shall apply to settle any dispute or claim that arises out or in connection with this memorandum of understanding and negotiations relating to the proposed IPLA. 4.1 This Heads of Agreement represents the good faith intentions of the parties to proceed with the proposed IPLA on the basis of the Draft IPLA but is not legally binding and creates no legal obligations on either party. Its sole purpose is to set out the principles on which the parties intend in good faith to negotiate legally definitive agreements. 57. Learned Senior Counsel also pointed out the email sent on 27.06.2006 by Nicole Fritsch on behalf of Respondents to the Appellant No.2 and also the email sent by Appellant No.2 on 16.09.2006 to Nic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmitted that the court has to determine where the centre of gravity for arbitration is situated. The terms that are normally used to denote seat are venue , place or seat . According to the learned senior counsel, the court cannot adopt a semantic approach. It was also submitted that under sub sections (1), (2) and (3) of Section 20 of Arbitration Act, 1996 the term place connotes different meanings. Under Section 20(1), place means seat of arbitration, whereas under section 20(3), place would mean venue. Therefore, the expression the venue of arbitration proceedings will have reference only to the seat of arbitration. It was submitted that all the surrounding circumstances would also show that parties intended to designate England as the seat of arbitration. 61. It was also submitted that all the proceedings between the parties would indicate that there is nothing to indicate India as the choice of the seat of arbitration. Learned senior counsel relied upon Shashoua v. Sharma,[ (2009) 2 LLR 376] Dozco India Pvt. Ltd. V. Doosan Infracore Company Ltd.[ (2011) 6 SCC 179 (Paras 4,15 and 18)] Videocon Industries v. Union of India,[ (2011) 6 SCC 161 (Paras 3 and Paras 20 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... don is the seat of arbitration. Particular reference was made to Paras 75,76, 96, 100, 104, 113, 116 and 117 of BALCO s judgment to submit that since the seat is outside India, only those provisions of Part I of the Indian Arbitration Act, 1996 will be applicable, which are not inconsistent with the English Law, i.e., English Arbitration Act, 1996. Anti-Suit injunction: 67. Dr. Singhvi submitted that the prayer of Appellants for an anti suit injunction is subject to determination by this court that the seat is India. Dr. Singhvi, however, argued that such an injunction be denied even if this court holds that the seat of arbitration is India since there is no occasion that warrants the grant of such an injunction. The Respondents relied upon the judgment of this court in Modi Entertainment Network v. W.S.G. Cricket Pte. Ltd. (supra) to submit that the present case does not fall within any, let alone all, of the parameters set out in the aforesaid case that determine the grant of an anti-suit injunction. 68. Mr. C.U. Singh, learned senior advocate, appeared for Respondent no.2. Mr. Singh adopts the submissions made before this court by Dr. Singhvi. Besides, Mr. Singh submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PLA; and the signing of the IPLA by the parties is therefore a strong circumstance in arriving at a prima facie conclusion as enunciated in Shin-Etsu Chemicals Co. Ltd. s case for referring the parties to arbitration. 72. The Daman Trial Court on the basis of the material on record came to the conclusion that IPLA was not a concluded contract for the want of free consent, and was executed due to undue influence, fraud, misrepresentation and mistake. It further held that the plaintiffs (the Appellants herein) would suffer heavy economic loss if the arbitration is held at London. These findings were reversed by the Daman Appellate Court. It was held that since IPLA has been signed by the parties, there was a valid arbitration agreement for reference of the disputes to arbitration. It was also held that assuming that there was some defect in the methodology for appointment of the arbitrators that would not come in the way of enforcement of the arbitration agreement. The Daman Appellate Court has further held that since the parties had agreed to London being the seat of arbitration, the Appellants (plaintiffs) could not raise a grievance as regards the jurisdiction of the English C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plea to the effect that the agreement is null, void or incapable of being performed. Justice Savant has not examined the pleadings as the issue with regard to the underlying contract has been left to be examined by the Arbitral Tribunal. Before us also, it is not the plea of the Appellants that the arbitration agreement is without free consent, or has been procured by coercion, undue influence, fraud, misrepresentation or was signed under a mistake. In other words, it is not claimed that the agreement is null and void, inoperative and incapable of being performed as it violates any of the provisions under Sections 14, 15, 16, 17, 18, 19, 19A and 20 of the Indian Contract Act, 1872. The submission is that the matter cannot be referred to arbitration as the IPLA, containing the arbitration clause/agreement, is not a concluded contract. This, in our opinion, would not fall within the parameters of an agreement being null and void, inoperative or incapable of being performed , in terms of Sections 14, 15, 16, 17, 18, 19 and 20 of the Indian Contract Act, 1872. These provisions set out the impediments, infirmities or eventualities that would render a particular provision of a contract ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed into the first SHA and TKHA. Even under that SHA, Article XVI inter alia provided for resolution of disputes by arbitration. The TKHA also contained an identically worded arbitration clause, under Article XIX. This intention to arbitrate has continued without waiver. In the face of this, the question of the concluded contract becomes irrelevant, for the purposes of making the reference to the Arbitral Tribunal. It must be clarified that the doubt raised by the Appellant is that there is no concluded IPLA, i.e. the substantive contract. But this can have no effect on the existence of a binding Arbitration Agreement in view of Clause 3. The parties have irrevocably agreed to resolve all the disputes through Arbitration. Parties can not be permitted to avoid arbitration, without satisfying the Court that it would be just and in the interest of all the parties not to proceed with arbitration. Furthermore in arbitration proceedings, courts are required to aid and support the arbitral process, and not to bring it to a grinding halt. If we were to accept the submissions of Mr. Nariman, we would be playing havoc with the progress of the arbitral process. This would be of no benefit to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egitimacy or independence of the collateral arbitration agreement, even if it is contained in a contract, which is claimed to be void or voidable or unconcluded by one of the parties. 81. The scope and ambit of provision contained in Section 16 of the Indian Contract Act has been clearly explained in Reva Electric Car (supra), wherein it was inter alia observed as follows: 54. Under Section 16(1), the legislature makes it clear that while considering any objection with respect to the existence or validity of the arbitration agreement, the arbitration clause which formed part of the contract, has to be treated as an agreement independent of the other terms of the contract. To ensure that there is no misunderstanding, Section 16(1)(b) further provides that even if the Arbitral Tribunal concludes that the contract is null and void, it should not result, as a matter of law, in an automatic invalidation of the arbitration clause. Section 16(1)(a) presumes the existence of a valid arbitration clause and mandates the same to be treated as an agreement independent of the other terms of the contract. By virtue of Section 16(1)(b), it continues to be enforceable notwithstanding a declara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n clause is workable as two Arbitrators are to be appointed by the licensors and one by the licensee. We are not inclined to agree with the aforesaid finding/conclusion recorded by the High Court. Respondent No.1 is the licensor and Respondent No.2 is undoubtedly 100% shareholder of Respondent No.1, but that is not the same as being an independent licensor. It would also be relevant to point out here that before this Court the Respondent has not even tried to support the aforesaid conclusion of the High Court. 83. In our opinion, the Courts have to adopt a pragmatic approach and not a pedantic or technical approach while interpreting or construing an arbitration agreement or arbitration clause. Therefore, when faced with a seemingly unworkable arbitration clause, it would be the duty of the Court to make the same workable within the permissible limits of the law, without stretching it beyond the boundaries of recognition. In other words, a common sense approach has to be adopted to give effect to the intention of the parties to arbitrate. In such a case, the court ought to adopt the attitude of a reasonable business person, having business common sense as well as being equipped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can be clearly ascertained in the facts and circumstances of the case. This, in turn, may depend upon the intention of the parties to be gathered from the correspondence exchanged between the parties, the agreement in question and the surrounding circumstances. What is required is to gather the intention of the parties as to whether they have agreed for resolution of the disputes through arbitration. What is required to be decided in an application under Section 11 of the 1996 Act is: whether there is an arbitration agreement as defined in the said Act. 84. It is a well recognized principle of arbitration jurisprudence in almost all the jurisdictions, especially those following the UNCITRAL Model Law, that the Courts play a supportive role in encouraging the arbitration to proceed rather than letting it come to a grinding halt. Another equally important principle recognized in almost all jurisdictions is the least intervention by the Courts. Under the Indian Arbitration Act, 1996, Section 5 specifically lays down that : Notwithstanding anything contained in any other law for the time being in force, in matters governed by this Part, no judicial authority shall intervene excep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an absurd result, and the words used are capable of being interpreted so as to avoid this result, the literal construction will be abandoned. 86. Mr. Rohinton Nariman had very fairly submitted that it is permissible for the Court to construe the arbitration clause in a particular manner to make the same workable when there is a defect or an omission in it. His only caveat was that such an exercise would not permit the Court to re-write the contract. In our opinion, in the present case, the crucial line which seems to be an omission or an error can be inserted by the Court. In this context, we find support from judgment of this court in Shin Satellite Public Co. Ltd. (supra), wherein the offending part in the arbitration clause made determination by the arbitrator final and binding between the parties and declared that the parties have waived the rights to appeal or an objection against such award in any jurisdiction. The Court, inter-alia, held that such an objectionable part is clearly severable being independent of the dispute that has to be referred to be resolved through arbitration. By giving effect to the arbitration clause, the court specifically noted that the it ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned sr. counsel only emphasised that the arbitrators having expressed the view that the arbitration clause is unworkable, the parties ought not to be sent to the arbitration. Similarly, other provisions contained in Sections 8, 11 and 45 of the Indian Arbitration Act, 1996 are machinery provisions to ensure that parties can proceed to arbitration provided they have expressed the intention to Arbitrate. This intention can be expressed by the parties, as specifically provided under Section 7 of the Indian Arbitration Act, 1996 by an exchange of letters, telex, telegrams or other means of telecommunication which provide a record of the agreement. Such intention can even be expressed in the pleadings of the parties such as statements of claim and defence, in which the existence of the agreement is alleged by one party and not denied by the other. In view of the above, we are of the opinion that the parties can be permitted to proceed to arbitration. Issue No. V/Re: Seat 89. This now clears the decks for the crucial question, i.e., is the seat of arbitration in London or in India. This is necessarily so as the location of the seat will determine the Courts that will hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Peru in the event of judicial dispute; and at the same time contained a clause providing that the arbitration would be governed by the English law and the procedural law of arbitration shall be the English law. The Court of Appeal summarised the state of the jurisprudence on this topic. Thereafter, the conclusions which arose from the material were summarised as follows: All contracts which provide for arbitration and contain a foreign element may involve three potentially relevant systems of law: (1) the law governing the substantive contract; (2) the law governing the agreement to arbitrate and the performance of that agreement; (3) the law governing the conduct of the arbitration. In the majority of cases all three will be the same. But (1) will often be different from (2) and (3). And occasionally, but rarely, (2) may also differ from (3). It was observed that the problem about all these formulations, including the third, is that they elide the distinction between the legal localisation of arbitration on the one hand and the appropriate or convenient geographical locality for hearings of the arbitration on the other hand. 92. On the facts of the case, it was observed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion, is undoubtedly India. 94. Further, on examination of the facts in Naviera Amazonica case, the Court of Appeal observed that there is nothing surprising in concluding that these parties intended that any dispute under this policy should be arbitrated in London. But it would always be open to the Arbitral Tribunal to hold hearings in Lima if this was thought to be convenient, even though the seat or forum of the arbitration would remain in London. In the present case, with the utmost ease, London can be replaced by India, and Lima with London. 95. Having chosen all the three applicable laws to be Indian laws, in our considered opinion, the parties would not have intended to have created an exceptionally difficult situation, of extreme complexities, by fixing the seat of arbitration in London. In view of the above, we are unable to accept the submissions made by Dr. Singhvi that in this case, the term venue ought to be read as seat. 96. We are also unable to accept the submission made by Dr. Singhvi that in this case the venue should be understood as reference to place in the manner it finds mention in Section 20(1), as opposed to the manner it appears in Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to appeal against this award upon a question of law whilst the defendant sought, in effect, a declaration that the court had no jurisdiction to entertain such an Application and for leave to enforce the award. The Court considered the issue of jurisdiction which arose out of application of Section 2 of the English Arbitration Act, 1996 which provides that: 2. Scope of application of provisions.-(1) The provisions of this Part apply where the seat of the arbitration is in England and Wales or Northern Ireland. 101. The Court notices the singular importance of determining the location of juridical seat in terms of Section 3, for the purposes of Section 2, in the following words of Akenhead, J.: 15. I must determine what the parties agreed was the seat of the arbitration for the purposes of Section 2 of the Arbitration Act, 1996. This means by Section 3 what the parties agreed was the juridical seat. The word juridical is not an irrelevant word or a word to be ignored in ascertaining what the seat is. It means and connotes the administration of justice so far as the arbitration is concerned. It implies that there must be a country whose job it is to administer, cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inciples stated by the Court of Appeal in Naviera Amazonica Peruana S.A. 104. Upon consideration of the entire material, the Court formed the view that it does have jurisdiction to entertain an Application by either party to the contract in question under Section 69 of the English Arbitration Act, 1996. The Court gave the following reasons for the decision: (a) One needs to consider what, in substance, the parties agreed was the law of the country which would juridically control the arbitration. (b) I attach particular importance to Clause 1.4.1. The parties agreed that essentially the English (and Welsh) courts have exclusive jurisdiction to settle disputes. Although this is subject to arbitration, it must and does mean something other than being mere verbiage. It is a jurisdiction over disputes and not simply a court in which a foreign award may be enforced. If it is in arbitration alone that disputes are to be settled and the English courts have no residual involvement in that process, this part of Clause 1.4.1 is meaningless in practice. The use of the word jurisdiction suggests some form of control. (c) The second part of Clause 1.4.1 has some real meaning i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Scottish courts would have no real control or interest in the arbitral proceedings other than in a criminal context, suggests that they can not have intended that the arbitral proceedings were to be conducted as an effectively delocalised arbitration or in a transnational firmament , to borrow Kerr, L.J. s words in Naviera Amazonica. (g) The CIMAR Rules are not inconsistent with my view. Their constant references to the Arbitration Act, 1996 suggest that the parties at least envisaged the possibility that the courts of England and Wales might play some part in policing any arbitration. For instance, Rule 11.5 envisages something called the court becoming involved in securing compliance with a peremptory order of the arbitrator. That would have to be the English court, in practice. 105. In our opinion, Mr. Nariman has rightly relied upon the ratio in Braes of Doune case (supra). Learned senior counsel has rightly pointed out that unlike the situation in Naviera Amazonica (supra), in the present case all the three laws: (i) the law governing the substantive contract; (ii) the law governing the agreement to arbitrate and the performance of that agreement (iii) the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n and that venue is only a misnomer. The parties having chosen the Indian Arbitration Act, 1996 as the law governing the substantive contract, the agreement to arbitrate and the performance of the agreement and the law governing the conduct of the arbitration; it would, therefore, in our opinion, be vexatious and oppressive if Enercon GMBH is permitted to compel EIL to litigate in England. This would unnecessarily give rise to the undesirable consequences so pithily pointed by Lord Brandon and Lord Diplock in Abidin Vs. Daver.[ [1984] AC 398] It was to avoid such a situation that the High Court of England Wales, in Braes of Doune, construed a provision designating Glasgow in Scotland as the seat of the arbitration as providing only for the venue of the arbitration. 108. At this stage, it would be appropriate to analyse the reasoning of the Court in Braes of Doune in support of construing the designated seat by the parties as making a reference only to the venue of arbitration. In that case, the Court held that there was no supplanting of the Scottish law by the English law, as both the seat under Section 2 and the juridical seat under Section 3, were held to be in England. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y shall be governed by and construed in accordance with the internal laws of the State of New York . A partial award was made in favour of the claimants. It was agreed that this partial award is, in English law terms, final as to what it decides. The defendant sought the tribunal s withdrawal of its findings. The defendant also intimated its intention to apply to a Federal Court applying the US Federal Arbitration Law governing the enforcement of arbitral award, which was said to permit vacatur of an award where arbitrators have manifestly disregarded the law. It was in consequence of such an intimation that the claimant sought and obtained an interim anti-suit injunction. The Judge held that parties had agreed that any proceedings seeking to attack or set aside the partial award would only be those permitted by the English law. It was not, therefore, permissible for the defendant to bring any proceedings in New York or elsewhere to attack the partial award. The Judge rejected the arguments to the effect that the choice of the law of New York as the proper law of the contract amounted to an agreement that the law of England should not apply to proceedings post award. The Judge als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... educed to saying that New York judicial remedies were also permitted. That, however, would be a recipe for litigation and (what is worse) confusion which cannot have been intended by the parties. No doubt New York law has its own judicial remedies for want of jurisdiction and serious irregularity but it could scarcely be supposed that a party aggrieved by one part of an award could proceed in one jurisdiction and a party aggrieved by another part of an award could proceed in another jurisdiction. Similarly, in the case of a single complaint about an award, it could not be supposed that the aggrieved party could complain in one jurisdiction and the satisfied party be entitled to ask the other jurisdiction to declare its satisfaction with the award. There would be a serious risk of parties rushing to get the first judgment or of conflicting decisions which the parties cannot have contemplated. 17. It follows from this that a choice of seat for the arbitration must be a choice of forum for remedies seeking to attack the award. (emphasis supplied) On the facts of the case, the Court held that the seat of the arbitration was in England and accordingly entertained the challenge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt s property in UK. The defendant applied to the Delhi High Court for an order directing the claimants not to take any action to execute the charging order, pending the final disposal of the Section 34 petition in Delhi seeking to set aside the costs award. The defendant had sought unsuccessfully to challenge the costs award in the Commercial Court under Section 68 and Section 69 of the English Arbitration Act, 1996 and to set aside the order giving leave to enforce the award. 117. Examining the fact situation in the case, the Court observed as follows: The basis for the court s grant of an anti-suit injunction of the kind sought depended upon the seat of the arbitration. An agreement as to the seat of an arbitration brought in the law of that country as the curial law and was analogous to an exclusive jurisdiction clause. Not only was there agreement to the curial law of the seat, but also to the courts of the seat having supervisory jurisdiction over the arbitration, so that, by agreeing to the seat, the parties agreed that any challenge to an interim or final award was to be made only in the courts of the place designated as the seat of the arbitration. Although, ven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of the arbitrators shall be made by majority decision and shall be final and binding on the parties hereto. The seat of the arbitration proceedings shall be London, United Kingdom. 120. Construing the aforesaid clause, the Court held as follows: On the contrary, for the reasons given, it seems to me that by their agreement the parties have chosen English law as the law to govern their arbitration proceedings, while contractually importing from the Indian Act those provisions of that Act which are concerned with the internal conduct of their arbitration and which are not inconsistent with the choice of English arbitral procedural law. 121. The same question was again considered by the High Court of Justice, Queen s Bench Division, Commercial Court (England) in SulameRica CIA Nacional De Seguros SA v. Enesa Engenharia SA - Enesa. The Court noticed that the issue in this case depends upon the weight to be given to the provision in Condition 12 of the insurance policy that the seat of the arbitration shall be London, England. It was observed that this necessarily carried with it the English Court s supervisory jurisdiction over the arbitration process. It was observed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e chosen to arbitrate, than with the place of the law of the underlying contract, in cases where the parties have deliberately chosen to arbitrate, in one place, disputes which have arisen under a contract governed by the law of another place . (C case, Bus LR p. 854, para 26) 122. Upon consideration of the entire matter, it was observed in SulameRica supra that In these circumstances it is clear to me that the law with which the agreement to arbitrate has its closest and most real connection is the law of the seat of arbitration, namely, the law of England . It was thereafter concluded by the High Court that the English law is the proper law of the agreement to arbitrate. The aforesaid observations make it abundantly clear that the submissions made by Dr. Singhvi cannot be supported either in law or in facts. In the present case, all the chosen laws are of India, therefore, it cannot be said the laws of England would have any application. 123. We also do not find any merit in the submission of Dr. Singhvi that the close and the most intimate connection test is wholly irrelevant in this case. It is true that the parties have specified all the three laws. But the Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rties. These observations have also been noticed in Union of India Vs. McDonald Duglas Corporation (supra). 125. In the present case, even though the venue of arbitration proceedings has been fixed in London, it cannot be presumed that the parties have intended the seat to be also in London. In an International Commercial Arbitration, venue can often be different from the seat of arbitration. In such circumstances, the hearing of the arbitration will be conducted at the venue fixed by the parties, but this would not bring about a change in the seat of the arbitration. This is precisely the ratio in Braes of Dounne. Therefore, in the present case, the seat would remain in India. 126. In Naviera Amazonica Peruana S.A. (supra), the Court of Appeal observed that it would always be open to the Arbitral Tribunal to hold the hearings in Lima if this were thought to be convenient, even though the seat or forum of the arbitration would remain in London. Issue No. VI/ Re: Concurrent Jurisdicion: 127. Having held that the seat of arbitration is in India, in our opinion, the Bombay High Court committed an error in concluding that the Courts in England would have concurrent jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d an appoint of a third arbitrator under s. 18 of the English Act would, if the Indian proceedings continue and the Supreme Court decides the matter differently from the Bombay High Court and this court, give rise to the possibility of conflicting judgments with all the chaos that might entail. In practice, therefore, the question of lifting the stay here and the grant of the anti-suit injunction against EIL are closely interconnected. 15. It cannot, in my judgment, be right that both English and Indian courts should be free to reach inconsistent judgments on the same subject matter, whether or not the current ultimate result in India, which allows for an English court to appoint an arbitrator by virtue of s.2(4) of the English Act, will or will not involve any inconsistent judgment, and whether there is or is not a current issue estoppels which would debar Enercon from contending that London is the seat of the arbitration, which is its primary case, giving rise, as it says, to the court s power to appoint an arbitrator under s.18 of the English Act by virtue of s.2(1) of that Act and by reference to s.3 of that Act. xx xxx xx xxx xx 56. Comity and the avoidance of inconsi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to appeal with subsequent delay might then arise in the context of the English proceedings. But, if I did make such a decision, in line with Eder J., I would be making a determination which is directly contrary to that of Savant J. and it seems to me that that is inappropriate as a matter of comity, whether or not there is any issue estoppels. 63. Moreover, it would be a recipe for confusion and injustice, and to back it up with an anti-suit injunction would merely fan the flames for a continued battle, which is contrary to the principles of comity when the position is unclear and the agreement itself is governed by Indian law. 129. In our opinion, these observations of Justice Cooke foresee the kind of intricate complexities that may arise in case the Courts of India and England were to exercise the concurrent jurisdiction in these matters. 130. We are unable to agree with the conclusion reached by Justice Savant that the Courts in England would exercise concurrent jurisdiction in the matter. Having concluded that the seat of arbitration is in India, the conclusions reached by the Bombay High Court seem to be contrary in nature. In Paragraph 45, it is concluded that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Arbitration Act. The question would be, whether the Indian Courts would have exclusive jurisdiction. The nexus between the seat or the place of arbitration vis- -vis the procedural law i.e. the lex arbitri is well settled by the judicial pronouncements which have been referred to in the earlier part of this judgment. A useful reference could also be made to the learned authors Redfern and Hunter who have stated thus :- the place or seat of the arbitration is not merely a matter of geography. It is the territorial link between the arbitration itself and the law of the place in which that arbitration is legally situated.... The choice of seat also has the effect of conferring exclusive jurisdiction to the Courts wherein the seat is situated. Here the Bombay High Court accepts that the seat carries with it, usually, the notion of exercising jurisdiction of the Courts where the seat is located. 133. Having said so, the High Court examines the question whether the English Courts can exercise jurisdictions in support of arbitration between the parties, in view of London being the venue for the arbitration meetings. In answering the aforesaid question, the High Court proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of forum non- conveniens is bereft of any merit. 137. The aforesaid conclusion again ignores the principle laid down by this Court in Oil Natural Gas Commission Vs. Western Company of North America (supra), wherein it is held as follows:- As per the contract, while the parties are governed by the Indian Arbitration Act and the Indian Courts have the exclusive jurisdiction to affirm or set aside the award under the said Act, the Respondent is seeking to violate the very arbitration clause on the basis of which the award have been obtained by seeking confirmation of the award in the New York Court under the American Law. This amounts to an improper use of the forum in American (sic) in violation of the stipulation to be governed by the Indian law, which by necessary implication means a stipulation to exclude the USA Court to seek an affirmation and to seek it only under the Indian Arbitration Act from an Indian Court. If the restraint order is not granted, serious prejudice would be occasioned and a party violating the very arbitration clause on the basis of which the award has come into existence will have secured an order enforcing the order from a foreign court in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bhouse J which I have quoted above. For that reason alone, I have decided somewhat reluctantly that I should follow the course suggested by Mr Edey QC ie that these proceedings should be stayed at least for the time being pending resolution of the Writ Petitions currently before the BHC 141. It must be noticed that Respondent No. 1 was initially having 51 per cent shareholding of the Appellant No.1 company, which was subsequently increased to 56 per cent. This would be an indicator that the Respondent No. 1 is actively carrying on business at Daman. This Court considered the expression carries on business as it occurs in Section 20 of the Civil Procedure Code in the case of Dhodha House Vs. S.K. Maingi[(2006) 9 SCC 41] and observed as follows:- 46. The expression carries on business and the expression personally works for gain connote two different meanings. For the purpose of carrying on business only presence of a man at a place is not necessary. Such business may be carried on at a place through an agent or a manager or through a servant. The owner may not even visit that place. The phrase carries on business at a certain place would, therefore, mean having an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esaid, we are inclined to restore the anti-suit injunction granted by the Daman Trial Court. 144. For the reasons recorded above, Civil Appeal No.2087 of 2014 @ SLP (C) No.10906 of 2013 is dismissed. The findings recorded by the Appellate Court that the parties can proceed to arbitration are affirmed. The findings recorded by the Trial Court dismissing the Application under Section 45 are set aside. In other words, the Application filed by the Respondents for reference of the dispute to arbitration under Section 45 has been correctly allowed by the Appellate Court as well as by the High Court. The findings of the High Court are affirmed to that extent. All the disputes arising between the parties in relation to the following agreements viz. SHA, TKHA, SSHAs and STKHA, Agreed Principles and IPLA, including the controversy as to whether IPLA is a concluded contract are referred to the Arbitral Tribunal for adjudication. 145. In the normal circumstances, we would have directed the parties to approach the two learned arbitrators, namely Mr. V.V. Veeder, QC and Mr. Justice B.P. Jeevan Reddy to appoint the third arbitrator who shall also act as the presiding arbitrator. However, ke ..... X X X X Extracts X X X X X X X X Extracts X X X X
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