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TMI Blog2011 (5) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... ction to entertain the petition filed u/s 9 of the Act because the parties had agreed that the law governing the arbitration will be English law and the provisions of Part-I of the Indian Arbitration Act would apply to international commercial arbitrations held outside India, unless the parties by agreement express or implied, exclude all or any of its provisions. In the present case also, the parties had agreed that notwithstanding Article 33.1, the arbitration agreement contained in Article 34 shall be governed by laws of England. This necessarily implies that the parties had agreed to exclude the provisions of Part I of the Act. As a corollary to the above conclusion, we hold that the Delhi HC did not have the jurisdiction to entertain the petition filed by the Respondents under Section 9 of the Act and the mere fact that the Appellant had earlier filed similar petitions was not sufficient to clothe that High Court with the jurisdiction to entertain the petition filed by the Respondents. In the result, the appeal is allowed. The impugned order is set aside and the petition filed by the Respondents under Section 9 of the Act is dismissed. - Civil Appeal No. 4269 of 2011 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (where Article 34.2 applies) or otherwise to an arbitral tribunal for final decision as hereinafter provided. 34.12. Venue and Law of Arbitration Agreement The venue of sole expert, conciliation or arbitration proceedings pursuant to this Article, unless the Parties otherwise agree, shall be Kuala Lumpur, Malaysia, and shall be conducted in the English language. Insofar as practicable, the Parties shall continue to implement the terms of this Contract notwithstanding the initiation of arbitral proceedings and any pending claim or dispute. Notwithstanding the provisions of Article 33.1, the arbitration agreement contained in this Article 34 shall be governed by the laws of England. 35.2 Amendment This Contract shall not be amended, modified, varied or supplemented in any respect except by an instrument in writing signed by all the Parties, which shall state the date upon which the amendment or modification shall become effective. 4. In 2000, disputes arose between the Respondents and the contractor with respect to correctness of certain cost recoveries and profit. Since the parties could not resolve their disputes amicably, the same were referred to the arbitral tribu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent No. 1 challenged partial award dated 31.3.2005 by filing a petition in the High Court of Malaysia at Kuala Lumpur. On being noticed, the Appellant questioned the maintainability of the case before the High Court of Malaysia by contending that in view of Clause 34.12 of the PSC only the English Courts have the jurisdiction to entertain any challenge to the award. 7. After filing the petition before the High Court of Malaysia, the Respondents made a request to the tribunal to conduct the remaining arbitral proceedings at Kuala Lumpur, but their request was rejected vide order dated 20.4.2006 and it was declared that the remaining arbitral proceedings will be held in London. 8. At that stage, the Respondents filed OMP No. 255 of 2006 under Section 9 of the Act in Delhi High Court for stay of the arbitral proceedings. They filed another OMP No. 329 of 2006 questioning award dated 31.3.2005 on the issue of exchange rate. The Appellant objected to the maintainability of OMP No. 255 of 2006 and pleaded that the Courts in India do not have the jurisdiction to entertain challenge to the arbitral award. The learned Single Judge of the Delhi High Court overruled the objection of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Counsel for the Respondent that the Petitioner cannot know insist on Kuala Lumpur being the seat of arbitration. The averments made by the Respondent, without prejudice to the veracity thereof, entail an examination on merit and thus cannot be accepted at this preliminary stage. Whether the Courts at Kuala Lumpur or London have the jurisdiction to decide upon the seat of arbitration squarely hinges on the procedural law governing the arbitration agreement. However, in a peculiar situation such as the present one where the governing procedural law is yet to be determined, I am of the view that a question regarding the seat of arbitration can be best decided by the Court to which the parties or to which the dispute is most closely connected. It is important to recall that in the instant case the parties have expressly stated in Article 33.1 of the PSC that the laws applicable to the contract would be the laws in force in India and that the Contract shall be governed and interpreted in accordance with the laws of India . These words are wide enough to engulf every question arising under the contract including the disputes between the parties and the mode of settlement. It was i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a stalemate. This, I am afraid, would not only be inimical to the interests of the parties but also affront to Section 9 of the Indian Arbitration, the underlying object whereof is to sub serve and facilitate arbitral proceedings. 9. Shri R.F. Nariman, learned senior counsel appearing for the Appellant argued that the impugned order is liable to be set aside because the learned Single Judge misconstrued and misapplied the judgment of this Court in Bhatia International v. Bulk Trading S.A. (supra) and erroneously held that the Delhi High Court has jurisdiction to decide O.M.P. No. 255 of 2006. Learned Counsel further argued that the learned Single Judge failed to appreciate that the reliefs prayed for in O.M.P. No. 255 of 2006 could not have been granted on an application filed under Section 9 of the Act because stay of arbitral proceedings is beyond the scope of that section. Learned senior counsel emphasized that Section 5 of the Act expressly bars intervention of the Courts except in matters expressly provided for in the Act and, therefore, even if the petition filed by the Respondents under Section 9 could be treated as maintainable, the High Court did not have jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e been changed merely on the basis of the so called agreement between the Appellant and the Respondents. Learned Solicitor General submitted that any change in the PSC requires the concurrence by all the parties to the contract and the consent, if any, given by two of the parties cannot have the effect of changing the same. He then argued that every written agreement on behalf of Respondent No. 1 is required to be expressed in the name of the President and in the absence of any written agreement having been reached between the parties to the PSC to amend the same, the consent given for shifting the physical seat of arbitration to London did not result in change of juridical seat of the arbitration which continues to be Kuala Lumpur. In support of this argument, the learned Solicitor General relied upon the judgments of this Court in Mulamchand v. State of Madhya Pradesh (1968) 3 SCR 214 and State of Haryana v. Lal Chand (1984) 3 SCR 715. In the end, he argued that the provisions of the English Arbitration Act, 1996 would have applied only if the seat of arbitration was in England and Wales. He submitted that London cannot be treated as juridical seat of arbitration merely because t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant circumstances. 13. A reading of the above reproduced provision shows that under the English law the seat of arbitration means juridical seat of arbitration, which can be designated by the parties to the arbitration agreement or by any arbitral or other institution or person empowered by the parties to do so or by the arbitral tribunal, if so authorised by the parties. In contrast, there is no provision in the Act under which the arbitral tribunal could change the juridical seat of arbitration which, as per the agreement of the parties, was Kuala Lumpur. Therefore, mere change in the physical venue of the hearing from Kuala Lumpur to Amsterdam and London did not amount to change in the juridical seat of arbitration. This is expressly indicated in Section 53 of the English Arbitration Act, 1996, which reads as under: 53. Place where award treated as made. Unless otherwise agreed by the parties, where the seat of the arbitration is in England and Wales or Northern Ireland, any award in the proceedings shall be treated as made there, regardless of where it was signed, despatched or delivered to any of the parties. 14. In Dozco India P. Ltd. v. Doosan Infracore Co. L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n may be held in a country which is a signatory to either the New York Convention or the Geneva Convention (hereinafter called the convention country ). An international commercial arbitration may be held in a non-convention country. The said Act nowhere provides that its provisions are not to apply to international commercial arbitrations which take place in a non-convention country. Admittedly, Part II only applies to arbitrations which take place in a convention country. Mr. Sen fairly admitted that Part II would not apply to an international commercial arbitration which takes place in a non-convention country. He also fairly admitted that there would be countries which are not signatories either to the New York Convention or to the Geneva Convention. It is not possible to accept the submission that the said Act makes no provision for international commercial arbitrations which take place in a non-convention country. Now let us look at Sub-sections (2), (3), (4) and (5) of Section 2. Sub-section (2) of Section 2 provides that Part I would apply where the place of arbitration is in India. To be immediately noted, that it is not providing that Part I shall not apply where the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) of Section 2. That the legislature did not intend to exclude the applicability of Part I to arbitrations, which take place outside India, is further clear from certain other provisions of the said Act. Sub-section (7) of Section 2 reads as follows: 2. (7) An arbitral award made under this Part shall be considered as a domestic award. As is set out hereinabove the said Act applies to (a) arbitrations held in India between Indians, and (b) international commercial arbitrations. As set out hereinabove international commercial arbitrations may take place in India or outside India. Outside India, an international commercial arbitration may be held in a convention country or in a nonconvention country. The said Act however only classifies awards as domestic awards or foreign awards . Mr. Sen admits that provisions of Part II make it clear that foreign awards are only those where the arbitration takes place in a convention country. Awards in arbitration proceedings which take place in a non-convention country are not considered to be foreign awards under the said Act. They would thus not be covered by Part II. An award passed in an arbitration which takes place in Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cept where so provided. Section 9 does not permit any or all applications. It only permits applications for interim measures mentioned in Clauses (i) and (ii) thereof. Thus there cannot be applications under Section 9 for stay of arbitral proceedings or to challenge the existence or validity of the arbitration agreements or the jurisdiction of the Arbitral Tribunal. All such challenges would have to be made before the Arbitral Tribunal under the said Act. The three-Judge Bench recorded its conclusion in the following words: To conclude, we hold that the provisions of Part I would apply to all arbitrations and to all proceedings relating thereto. 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 will not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d outside India is not enforceable in India by invoking the provisions of the Act or Code of Civil Procedure . However, after critical analysis of para 26, we are unable to accept the argument of the learned Senior Counsel for the Respondent. Paras 26 and 27 start by dealing with the arguments of Mr Sen who argued that Part I is not applicable to foreign awards. It is only in the sentence starting at the bottom of para 26 that the phrase it must immediately be clarified that the finding of the Court is rendered. That finding is to the effect that an express or implied agreement of parties can exclude the applicability of Part I. The finding specifically states: But if not so excluded, the provisions of Part I will also apply to all 'foreign awards'. This exception which is carved out, based on agreement of the parties, in para 21 (placita e to f) is extracted below: 21. ...By omitting to provide that Part I will not apply to international commercial arbitrations which take place outside India the effect would be that Part I would also apply to international commercial arbitrations held out of India. But by not specifically providing that the provisions of Part I appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ara under Section 9 of the Act. A preliminary objection was raised to the maintainability of that petition. The learned District Judge accepted the objection. The learned Single Judge of Gujarat High Court referred to Clause 9.5 of the agreement, which was as under: 9.5 Governing Law and Arbitration 1. This Agreement (except for the provisions of Clause 9.5.4 relating to arbitration) shall be governed by and construed in accordance with the substantive laws of India. 2. Any dispute or difference of whatever nature arising under, out of, or in connection with this Agreement, including any question regarding its existence, validity or termination, which the parties are unable to resolve between themselves within sixty (60) days of notification by one or more Parties to the other(s) that a dispute exists for the purpose of this Clause 9 shall at the instance of any Party be referred to and finally resolved by Arbitration under the rules of the London Court of International Arbitration (SLCIA), which Rules (Rules) are deemed to be incorporated by reference into this clause. 3. The Tribunal shall consist of two arbitrators who shall be Queen's Counsel, practicing at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcluded by that law or rules would not apply. Thus, even as per the decision relied upon by learned advocate for the Appellant, if the parties have agreed to be governed by any law other than Indian law in cases of international commercial arbitration, same would prevail. In the case on hand, it is very clear even on plain reading of Clause 9.5.4 that the parties' intention was to be governed by English law in respect of arbitration. It is not possible to give a narrow meaning to this clause as suggested by learned Senior Advocate Mr. Thakore that it would apply only in case of dispute on Arbitration Agreement. It can be interpreted only to mean that in case of any dispute regarding arbitration, English law would apply. When the clause deals with the place and language of arbitration with a specific provision that the law governing arbitration will be the English law, such a narrow meaning cannot be given. No other view is possible in light of exception carved out of Clause 9.5.1 relating to arbitration. Term Arbitration, in Clause 9.5.4 cannot be taken to mean arbitration agreement. Entire arbitral proceedings have to be taken to be agreed to be governed by English law. 18. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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