9911796707
TMI Blog2015 (9) TMI 1629X X X X Extracts X X X X X X X X Extracts X X X X ..... ign Awards Act, while enacting Part-II of the Arbitration Act, 1996, which repealed all the three earlier laws and put the law of arbitration into one statute, albeit in four different parts. This Court has already determined both that the juridical seat of the arbitration is at London and that the arbitration agreement is governed by English law. This being the case, it is not open to the Union of India to argue that Part-I of the Arbitration Act, 1996 would be applicable. A Section 14 application made under Part-I would consequently not be maintainable - SLP dismissed. - Special Leave Petition (Civil) No.11396 OF 2015 - - - Dated:- 22-9-2015 - A.K. Sikri And R.F. Nariman, JJ. JUDGMENT R.F. Nariman, 1. The present case arises as a sequel to this Court s decision delivered on 28th May, 2014 in Reliance Industries Limited and another v. Union of India, (2014) 7 SCC 603. 2. A brief r sum of the facts that led to the judgment of this Court on 28th May, 2014 are as follows:- Two Production Sharing Contracts (hereinafter referred to as PSC ) for the Tapti and Panna Mukta Fields were executed between Reliance Industries Limited, the Union of India, Enron Oil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an of the Tribunal. On 14.9.2011, the Union of India, Reliance Industries Limited and BG Exploration and Production India Limited, agreed to change the seat of arbitration to London, England and a final partial consent award was made and duly signed by the parties to this effect. On 12.9.2012, the Arbitral Tribunal passed a final partial award which became the subject matter of a Section 34 petition filed in the Delhi High Court by the Union of India, dated 13.12.2012. The Delhi High Court by a judgment and order dated 22.3.2013 decided that the said petition filed under Section 34 was maintainable. This Court in a detailed judgment dated 28.5.2014 reversed the Delhi High Court. Since this judgment in effect determines the controversy raised in the present SLP, it is important to set it out in some detail. After stating the facts and the contentions of both parties, this Court held: Before we analyse the submissions made by the learned Senior Counsel for both the parties, it would be appropriate to notice the various factual and legal points on which the parties are agreed. The controversy herein would have to be decided on the basis of the law declared by this Court in Bhatia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the relevant articles of the PSC, to discover the real intention of the parties as to whether the provisions of the Arbitration Act, 1996 have been excluded. It must, immediately, be noticed that Articles 32.1 and 32.2 deal with applicable law and language of the contract as is evident from the heading of the article which is Applicable law and language of the contract . Article 32.1 provides for the proper law of the contract i.e. laws of India. Article 32.2 makes a declaration that none of the provisions contained in the contract would entitle either the Government or the contractor to exercise the rights, privileges and powers conferred upon it by the contract in a manner which would contravene the laws of India. Article 33 makes a very detailed provision with regard to the resolution of disputes through arbitration. The two articles do not overlap-one (Article 32) deals with the proper law of the contract, the other (Article 33) deals with ADR i.e. consultations between the parties; conciliation; reference to a sole expert and ultimately arbitration. Under Article 33, at first efforts should be made by the parties to settle the disputes among themselves (Article 33.1). If th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated under the claimants' notice of arbitration dated 16-12-2010 shall be London, England. We are of the opinion, upon a meaningful reading of the aforesaid articles of the PSC, that the proper law of the contract is Indian law; proper law of the arbitration agreement is the law of England. Therefore, can it be said as canvassed by the respondents, that applicability of the Arbitration Act, 1996 has not been excluded? [at paras 36 - 42] 4. The Court went on to state in paragraph 45 that it is too late in the day to contend that the seat of arbitration is not analogous to an exclusive jurisdiction clause and then went on to hold as follows:- In our opinion, these observations in Sulamerica case [(2013) 1 WLR 102 : 2012 EWCA Civ 638 : 2012 WL 14764] are fully applicable to the facts and circumstances of this case. The conclusion reached by the High Court would lead to the chaotic situation where the parties would be left rushing between India and England for redressal of their grievances. The provisions of Part I of the Arbitration Act, 1996 (Indian) are necessarily excluded; being wholly inconsistent with the arbitration agreement which provides that arbitration ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... London, Part I of the Arbitration Act would still be applicable as the laws governing the substantive contract are Indian laws. In the event a final award is made against the respondent, the enforceability of the same in India can be resisted on the ground of public policy. The conclusion of the High Court that in the event, the award is sought to be enforced outside India, it would leave the Indian party remediless is without any basis as the parties have consensually provided that the arbitration agreement will be governed by the English law. Therefore, the remedy against the award will have to be sought in England, where the juridical seat is located. However, we accept the submission of the appellant that since the substantive law governing the contract is Indian law, even the courts in England, in case the arbitrability is challenged, will have to decide the issue by applying Indian law viz. the principle of public policy, etc. as it prevails in Indian law. In view of the above, the appeal is allowed and the impugned judgment [(2013) 199 DLT 469] of the High Court is set aside. [at paras 74 - 77] 5. Continuing the narration of facts, the present SLP arises out o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Permanent Court of Arbitration dated 10.6.2013 by which its objections to the appointment of Mr. Peter Leaver as Arbitrator were already rejected. 9. We have heard learned counsel for the parties. In order to fully appreciate the contention raised by the learned Solicitor General of India, it is necessary to delve into the history of the law of arbitration in India. Prior to the 1996 Act, three Acts governed the law of Arbitration in India the Arbitration (Protocol and Convention) Act, 1937, which gave effect to the Geneva Convention, the Arbitration Act, 1940, which dealt with domestic awards, and the Foreign Awards (Recognition And Enforcement) Act, 1961 which gave effect to the New York Convention of 1958 and which dealt with challenges to awards made which were foreign awards. 10. In National Thermal Power Corporation v. Singer Company, (1992) 3 SCC 551, this Court while construing Section 9(b) of the Foreign Awards Act held that where an arbitration agreement was governed by the law of India, the Arbitration Act, 1940 alone would apply and not the Foreign Awards Act. The arbitration clause in Singer s case read as follows:- Sub-clause 6 of Clause 27 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercisable by the English courts and the applicability of the laws of that country in procedural matters must be viewed as concurrent and consistent with the jurisdiction of the competent Indian courts and the operation of Indian laws in all matters concerning arbitration insofar as the main contract as well as that which is contained in the arbitration clause are governed by the laws of India. [at para 53] 12. It can be seen that this Court in Singer s case did not give effect to the difference between the substantive law of the contract and the law that governed the arbitration. Therefore, since a construction of Section 9(b) of the Foreign Awards Act led to the aforesaid situation and led to the doctrine of concurrent jurisdiction, the 1996 Act, while enacting Section 9(a) of the repealed Foreign Awards Act, 1961, in Section 51 thereof, was careful enough to omit Section 9(b) of the 1961 Act which, as stated hereinabove, excluded the Foreign Awards Act from applying to any award made on arbitration agreements governed by the law of India. 13. This being the case, the theory of concurrent jurisdiction was expressly given a go-by with the dropping of Section 9(b) of the Fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the law now declared by this Court shall apply prospectively, to all the arbitration agreements executed hereafter. [at para 197] 16. It will thus be seen that facts like the present case attract the Bhatia International principle of concurrent jurisdiction inasmuch as all arbitration agreements entered into before 12.9.2012, that is the date of pronouncement of Bharat Aluminium Company s judgment, will be governed by Bhatia International. 17. It is important to note that in paragraph 32 of Bhatia International itself this Court has held that Part-I of the Arbitration Act, 1996 will not apply if it has been excluded either expressly or by necessary implication. Several judgments of this Court have held that Part-I is excluded by necessary implication if it is found that on the facts of a case either the juridical seat of the arbitration is outside India or the law governing the arbitration agreement is a law other than Indian law. This is now well settled by a series of decisions of this Court [see: Videocon Industries Ltd. v. Union of India Anr., (2011) 6 SCC 161, Dozco India Private Limited v. Doosan Infracore Company Limited, (2011) 6 SCC 179, Yograj Infrastructure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the background in which the contract was entered into, irresistibly lead in that direction. We are not impressed by the submission that by such interpretation it will put the respondent in an advantageous position. Therefore, we think it would be appropriate to interpret the clause that it is a proper clause or substantial clause and not a curial or a procedural one by which the arbitration proceedings are to be conducted and hence, we are disposed to think that the seat of arbitration will be at London. Having said that the implied exclusion principle stated in Bhatia International (supra) would be applicable, regard being had to the clause in the agreement, there is no need to dwell upon the contention raised pertaining to the addendum, for any interpretation placed on the said document would not make any difference to the ultimate conclusion that we have already arrived at. [at paras 46 and 47] 19. It is interesting to note that even though the law governing the arbitration agreement was not specified, yet this Court held, having regard to various circumstances, that the seat of arbitration would be London and therefore, by necessary implication, the ratio of Bhatia Int ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
