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TMI Blog2013 (6) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... bai, a letter of intent dated 28 September 2000 (The agreement) leasing of 6 IMAX systems to be installed in India. On 22 November 2000, they executed a contract under which Imax agreed to sell to E[1]city an IMAX 37 GT Projection system. On 21 December 2000, Imax entered into an agreement with Electronic Media Ltd (EML) and agreed to sell a single Imax cinema system. As alleged, EML failed to fulfill its obligations therefore, the ICC arbitration. (EML arbitration). 3 There arose disputes between the parties. Imax requested for Arbitration against EML and E city separately. The petitioner filed its answer to the Request for Arbitration under Article 5(1) of the ICC Rules. The Arbitral Tribunal constituted and proceeded accordingly. 4 The Respondent filed a Statement of Claim. The Petitioner filed its Statement of defence. The Arbitral Tribunal conducted an evidential hearing on the question of E city's liability to pay damages to Imax Ltd. On 9 February 2006 the Arbitral Tribunal rendered a Partial Award ordering, amongst other things, an assessment of damages payable by E city to Imax Ltd. On 15 May 2006 further Statement of Damages filed by the Respondent. On 31 May 2006 a S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al : Time is of the essence and no extension of time shall constitute a waive of any provision. The parties shall be entitled to their remedies at law for any breach of this Agreement, provided, however, in no event shall Imax be liable to the other for special, consequential or punitive damages, E city shall pay any Indian taxes, duty, customs and similar charges levied on a respecting the System and the Classes, the license to use the Trademarks or payments to be made hereunder. The Initial rent, additional rent and any other amounts required to be paid by E city hereunder shall be paid without any deduction, abatement or set off except for the appropriate withholding taxes (to a maximum of 10% ) required by law to be deducted at source. All amounts referred to herein are in US currency. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Imax and E city acknowledge that the structure of this transaction is contingent upon the approval of the Reserve Bank of India, and Imax and E [1] city agree to any reasonable restructuring requested by the Reserve Bank of India, so long as such restructuring does not negatively impact E city or Imax in a material fashio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Awards have been made in London at the judicial seat of the arbitration. For the purpose of deciding the issue of jurisdiction, the decisions so given by the Tribunal with regard to the jurisdiction of the Tribunal to decide the dispute; and the procedural, as well as, the substantive laws applied to resolve the disputes are relevant. 11 The challenge to all these awards is maintainable in India is the issue which has to be considered on the basis of the law laid down by the Supreme Court of India in Bhatia International vs. Bulk Trading SA [2002 (4) SCC 105] and Venture Global vs. Satyam Computers [2008 (4) SCC 190] . These Courts decisions are always the source to resolve the conflict of laws. The relevant paragraphs from Venture Global are as under : 28 Mr. Nariman, after taking us through the relevant provisions of Chapter I, Part II submitted that Section 48(1)(e) read with Section 48(3) of the Act specifies that an action to set aside a foreign award within the meaning of Section 44 of the Act would lie to the competent authority of the country in which, or under the law of which, that award was made . According to him, the phrase the country...under the law of which, that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultimate conclusion that Part I would apply even for foreign awards is an answer to the main issue raised in this case Proper Law: 12 The extract from The Law and Practice of Commercial Arbitration in England, Second Edition (Sir Michael J. Mustill and Stewart C. Boyd) , is reproduced: 2 The proper law of the arbitration agreement: The proper law of the arbitration agreement is determined in accordance with the same principles as apply for the determination of the proper law of any ordinary contract. 1. The first step is to inquire whether the parties have expressly chosen the law which is to apply to the agreement. If so, this choice of law will prevail, even if the chosen law differs from : (a) the proper law of the underlying contract or (b) the curial law. When the court is faced with a problem in this field, questions of classification will have to be considered: for the court cannot identify the relevant law, without first asking whether it is looking for law 2, 3 or 4, it is unnecessary to take up space with a full discussion of this problem, but a classification on the following lines would seem to be indicated 1 The proper law of the arbitration agreement governs the valid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rporation vs. Singer Company and ors., [(1992) 3 SCC 551/AIR 1993 SC 998.] has observed that; (a) a proper law governing the arbitration is distinct and different from the law procedural law governing the conduct of the arbitration; (b) the proper law of arbitration is the same as the proper law of the underlying contract if such a law has agreed to by the parties; (c) if no procedural law of arbitration is agreed to by the parties, then the law of the place or seat of arbitration would determine the procedural law of arbitration; (d) the issue as regards validity of the arbitration agreement, jurisdiction of the arbitrator etc are issues which are to be governed by the proper law of arbitration and not by the procedural law of the arbitration. 17 It is necessary to consider Sections 20, 28, 31(4) of the Arbitration Act while deciding the issue so raised in the present matter. 20 Place of arbitration. (1) The parties are free to agree on the place of arbitration (2) Failing any agreement referred to in sub section (1), the place of arbitration shall be determined by the arbitral tribunal having regard to the circumstances of the case, including the convenience of the parties. (3) N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roper law/governing law: 19 The different terms proper law , the substantive law , the governing law have similar and same purpose and understanding in the National and/or International arbitration. The interpretation and/or meaning of the terms and/or its challenge and/or breaches of the contract and/or the flowing rights and obligations apart from related facts and circumstances are always the basic elements of any reasoned arbitral award. The Indian laws, therefore, in view of the clear terms and conditions shall be the governing law or the proper law of the contract. The agreed Singapore law, even if any, or the English law as contended by the Respondent to be the governing law, just cannot be accepted to overlook the binding effect of the clauses of the terms and the Indian laws. The Arbitration Act, even otherwise, as not specifically excluded, therefore, there is no question of accepting the case of exclusion by implication in the present matter. All the parties are bound by the terms and conditions and the Indian laws. The compliances and/or obligations flowing from it goes to the root of the contract between the parties. 20 Another aspect is, in the arbitration proceedings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m and no payments in respect of four remaining systems and, therefore, awarded the damages. 23 As noted, the Petitioner's application under Article 6.2 of the ICC Rules with regard to the question of jurisdiction and the final Award is a nullity was also rejected again by relying on Singapore Laws. The Respondent's case was that the governing law is the English law. The contract, as referred above, shows that the agreed clauses was Singapore law so also the jurisdiction of the Singapore Court. The learned Tribunal, on the issue of amalgamation of the Respondent, rejected the Petitioner's objection by relying upon the Canadian law. Partial awards and the final award: 24 All these partial awards are interlinked and inter[1]connected. The liability award dated 9 February 2006 and the partial and final award on the jurisdiction and quantum of damages on 24 August 2007 just cannot be read in isolation by overlooking the issue of interest and costs as awarded in the final award and the time /extension sought from the ICC Court for rendering the final award pursuance to Article 22 of the ICC Rules. All issues are required to be read together only after the receipt of the final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o also the Arbitral Tribunal. The adoption of China Commission/ procedure/rules itself cannot be read and/or means that the parties have agreed to exclude the provisions of Part I of Arbitration Act as arbitration held outside India. Therefore, in view of specific agreement between the parties, I am inclined to observe that there is no such agreement even by implication to exclude the provisions of Part I of the Arbitration Act of India and the governing laws of the contract. 35 The constitution Bench of Supreme Court on 6 September 2012, in Bharat Aluminium Company Vs. Kaiser Aluminium Technical Services Inc. [(2012) 9 SCC 552] while dealing with the correctness of the Judgments of Bhatia International (supra), Videocon(Supra) and Venture Global engineering (supra) declared that, as those Judgments have been in the field since long, will govern the agreements between the parties as made prior to the date of this judgment. The judgment so declared will be applicable prospectively. Therefore, all earlier transactions/ litigations will be governed by the laws and regulation, which have been in existence prior to the date of the judgment. In the present case, in view of clear notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contract was to be performed in India. Admittedly, Singapore law is a foreign law which needs to be pleaded and proved. [ Hari Shanker Jain v. Sonia Gandhi (2001) 8 SCC 233. ], read with Section 57 of Indian Evidence Act. There is nothing on record to show that there is any inconsistency in Singapore law so as to oust Part I of the Arbitration Act. 30 It is also necessary to note that there is no serious denial to the contents of the agreements by the respective parties and so also their respective legal obligations and liabilities to be performed in India in view of the e governing laws of India. I am inclined to observe that the Indian laws are applicable to the transactions in every aspect and definitely not the English or Singapore laws. I am inclined to observe that there is no case to extend the other provisions of international Treaties and conventions and/or the foreign judgments so cited and relied to overlook the clear clauses between the parties to be governed by the Indian laws. 31 The Law of Singapore and/or English law, in no way, takes away the rights of the petitioner to challenge the Awards in India as agreement clause itself, entitled the parties to invoke their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lauses and the vagueness. There is nothing to prevent the Court from construing the agreement in such situation. In the present matter, therefore, I am inclined to observe/hold that the challenge to such international award in India is maintainable. There is no total bar. The Arbitral Tribunal's power to control the arbitration proceedings goes away once the final award is passed and approved/confirmed by the Arbitral Court as per the ICC Rules. There is nothing thereafter requires the supervision of Arbitral Tribunal except permissible correction of the award for the specific reasons and circumstances. The Court for Section 34 Petition: 33 I am of the opinion that the Court as contemplated in Section 2(e) and 34 of the Arbitration Act is this Court in India having jurisdiction to decide the questions forming the subject matter of the arbitration . The cause of action is situated within the jurisdiction of this Court at Mumbai, in India. The place of arbitration in no way a decisive factor to determine the jurisdiction of the Court to entertain the petition under Section 34 of the Arbitration Act. It is relevant to note that the choice of law and the law of the place of arbitra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Acts are also silent about the same. Section 34 Petition maintainable in India: 35 There is no specific bar created by any specific provision of Arbitration Act. Therefore, by such self imposed bar the aggrieved party's rights to challenge the award in the Competent Court, where he can put the award for enforcement, as subject matter is also fall within the same court's jurisdiction just cannot be taken away. The finality of award is relevant under the arbitration law even for the execution and/or enforcement, which always subject to the competent Court's confirmation of the award. It is also subject to the cause of action and/or subject matter within the jurisdiction of the Competent Court, as per the substantive law of the agreement. The decisive factor, therefore, to decide the court's jurisdiction for challenging the award, in my view, is existence of the subject matter and cause of action within the jurisdiction of the competent court as contemplated under the agreement and the governing law of the contract. The Court of Seat of Arbitration, as sought to be contended, in my view, in every matter, and specifically in the present facts and circumstances, canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal is under obligation to pass the enforceable award. The Court is under obligation to adjudicate and resolve the conflicts and so also the Arbitral Tribunal, in accordance with the national law and /or the governing law as per the terms. I am inclined to observe that Chapter II which deals with the power of competent court to decide the award and further to enforce the same by treating decree of court as contemplated under the Code of Civil Procedure (CPC) just cannot be controlled by the procedural rules and/or procedural law of arbitration and/or by the Court of seat of arbitration even though the arbitral Tribunal have passed the final award and thereby terminated the arbitration proceedings itself. The Arbitral Tribunal thereafter becomes functus officio. Therefore, the submission that the Court where seat of arbitration was fixed/agreed should supervise such final award, in my view, creates more complication than solving it specifically in view of the agreed conflicting terms and conditions like in the present case. I am inclined to hold that there is direct relation between the court who passed the award and/or confirmed and/or modified the award with its enforcement ..... 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