Full Text
HIGH COURT OF DELHI
FOCUS ENERGY LIMITED ..... Petitioner
Through Mr. Arun Kathpalia, Senior Advocate with Mr. Prashant Mishra, Ms. Jomol Joy, Ms. Bani Brar and Mr. Siddharth Nath, (Mob.9717068176)
Through Mr. Rajiv Nayar, Senior Advocate with Mr. Joy Basu, Senior Advocate and Mr. Joy Roy, Ms. Smarika Singh, Mr. Anand Raja, Mr. Shantanu Tyagi, Advocates.(Mob.9810098332)
FOCUS ENERGY LIMITED ..... Petitioner
Through Mr. Arun Kathpalia, Senior Advocate with Mr. Prashant Mishra, Ms. Jomol Joy, Ms. Bani Brar and Mr. Siddharth Nath, (Mob.9717068176)
Through Mr. Rajiv Nayar, Senior Advocate with Mr. Joy Basu, Senior Advocate and Mr. Joy Roy, Ms. Smarika Singh, Mr. Anand Raja, Mr. Shantanu Tyagi, Advocates.(Mob.9810098332)
JUDGMENT
1. The present petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (“the Act”) challenge the partial and final awards 2018:DHC:7079 OMP 214/2010 & 716/2011 dated 4th November, 2010 and 24th May, 2011, respectively, delivered by the London Court of International Arbitration (LCIA).
2. The Petitioner and the Respondent had entered into a Joint Venture Agreement (hereinafter, ‘JVA’) dated 1st March, 1995 to establish a company in India by the name `Reebok India Company’. According to the Respondent, a written request was sent by it to the Petitioner, seeking to purchase shares of Reebok India as per Section 4 of the Agreement. Since the Petitioner did not agree to the said sale of shares, the Respondent invoked arbitration in terms of Section 4 and Section 11 of the JVA.
3. The invocation took place on 17th March, 2008. The parties nominated their respective arbitrators and the LCIA appointed the chairman. i.e. the presiding arbitrator. It was further agreed by the parties that the time limits for issuance of the award, as set out in Section 11(B), were waived and the Rules of LCIA would apply instead.
4. After completion of pleadings, the interim award was rendered on 4th November, 2009. The same came to be challenged before this Court under Section 34, vide OMP 214/2010. On 20th April, 2010, notice was issued in the petition. On the said date, the court directed as under. “Issue notice to the respondent. Mr. Amar Gupta, Adv. accepts notice on behalf of respondent. He prays for and is granted six weeks’ time to file a reply affidavit. Rejoinder, if any, be filed before the next date of hearing. Without prejudice to the rights and contentions of the parties, it is agreed that the Arbitral Tribunal may in the meantime pass a final award after valuing the shares. List on 23rd September, 2010.”
5. On 15th December, 2010, an application moved by the Petitioner under Order VI Rule 17 was decided. Further grounds of challenge including those to the effect that Section 4 of the JVA is void, illegal and opposed to public policy, were permitted to be added, while reserving the right of the Respondent to rebut these submissions. The amended petition was thereafter filed.
6. The tribunal rendered its final award on 24th May, 2011. The Petitioner then filed OMP 716/2011, challenging the final award.
7. The Respondent initially filed its replies to the substantive grounds of challenge raised against the award. Thereafter the Respondent filed IA NO. 16732 of 2011 seeking to place on record an additional reply. The additional reply takes a preliminary objection as to the maintainability of the Petition itself, under Section 34 of the Act.
8. The submission of the Respondent is that since the arbitration agreement is governed by the laws of England, Part I of the Act is excluded, hence a challenge under Section 34 is not maintainable. The matter was taken up for hearing on 20th July, 2018 on which date this preliminary objection was raised by the Respondent, and thereafter submissions have been heard on behalf of parties only in respect of the said preliminary objection. On behalf of the Respondent it is submitted by Mr. Rajiv Nayar and Mr. Joy Basu, Senior Counsels that the Petition is not maintainable, in view of the settled pronouncements of the Supreme Court in various judgments, starting with Bhatia International v Bulk Trading S.A. (2002) 4 SCC 105 (hereinafter, ‘Bhatia International’). They rely on Sections 4 and 11 of the JVA to argue that an award rendered by LCIA in England, in a proceeding where the arbitration agreement is governed by the laws of England, is a foreign award. It is further submitted that though the substantive law governing the agreement is Indian law, since the seat is in London, the Arbitration Agreement is governed by English law and parties have also accepted the same during the course of arbitral proceedings. Thus, the Petition itself is not maintainable. According to Ld. Counsels, there is no doubt that parties have clearly agreed to the exclusion of Part I.
9. On the other hand, Mr. Kathpalia appearing for the Petitioner submits that the entire objection is a complete afterthought. The matter has been pending before this court since 2010, when the partial award was challenged, and in response to paragraph 48 of Focus’s petition under Section 34 i.e. OMP 214/2010, where the Petitioner specifically averred that this Court had jurisdiction, the Respondent, in its reply to the said petition, did not dispute the same. In its reply, the Respondent simply pleaded that the `contents of paragraph no. 48 require no comment’. Thus, according to the Petitioner, the Respondent has admitted to the jurisdiction of the courts in Delhi. He further submits that there has been no implied or express exclusion of Part I of the Act. Further, as per the principle laid down in Bhatia International (supra), even in an international commercial arbitration, Part I is not excluded. It is submitted by Counsel that the judgment of the Supreme Court in Bharat Aluminium Company Ltd. v Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 649 (hereinafter, ‘BALCO-I’) has no application to the present case, as the agreement is pre- BALCO-I and the BALCO-I judgement is of prospective application. It is further submitted that even if it is presumed under Section 11(B) of the JVA that the law governing the arbitration agreement is English law, this is not the case in respect of disputes arising under Section 4. The dispute in the present case purely relates to disputes under Section 4, which provide that only the appointment process would be as per Section 11(B). Thus, 11(B) cannot be read to apply to Section 4 in entirety. Section 4 is silent on the law governing the arbitration agreement and therefore, there is neither implied express nor implied exclusion of Part I of the Act. Analysis and Findings
10. The agreement in the present case is dated 1st March, 1995. Section 11(A) and 11(B) of the agreement read as under: “ SECTION 11 - GOVERNING LAW
B. RIL and PHOENIX hereby agreed to submit to arbitration in London, England any disputes arising hereunder. Such arbitration shall be conducted by three arbitrators in the English language in accordance with the rules then in force of the International Court of Arbitration, London, England. The appointment of the arbitrators shall fall on such persons as the parties may appoint by mutual agreement within a period not to exceed 30 days from the statement by either of the parties that it intends to submit the matter to arbitration, or if not agreed by the parties on such arbitrators as may be appointed by the President of the International Court of Arbitration. The arbitrator shall render an award within a period not to exceed one month from the arbitrator’s acceptance, and the parties undertake to observe all the terms of said award. Any expenses incurred in such arbitration shall be awarded as the arbitrator shall decide. In the event for whatsoever reason that the dispute is not resolved within 90 days of written notice to the other Party, either Party may terminate this agreement with immediate effect. The arbitration agreements contained in this section shall be governed by the internal laws of England.”
11. A reading of the above two clauses clearly shows that in this agreement, the parties agree as under:
1) Validity, construction and interpretation of the agreement was to be governed by Indian Law i.e., substantive law of the contract was Indian Law.
2) Parties agreed to submit to arbitration in London and the venue of the arbitration proceedings was London, England.
3) The arbitration was to be conducted in accordance with the Rules in force of ICA, London, England, thus the procedural law was of the ICA, London.
4) In case of disputes between the parties, the Arbitrators were to be appointed by the President of ICA.
5) The arbitration agreement was to be governed by the laws of England.
12. Section 4 of the Agreement reads as under: “SECTION 4 – TRANSFER OF SHARES IN REEBOK INDIA TO RIL PHOENIX has agreed that, in any event and for any reason whatsoever from 31st March, 2001, and additionally in the event of a) the termination or expiration of this Agreement or any of the Agreements referred to in Section 2(A) above, or b) the appointment of a receiver or liquidator of PHOENIX or any PHOENIX operating entity involved in the REEBOK business, or c) PHOENIX’s breach of this agreement, that PHOENIX (or any of its successors or assigns or any such company owning shares in REEBOK INDIA) shall, upon the written request of RIL and within 30 days, offer to sell to RIL, or to a party designated by RIL, all of the shares in REEBOK INDIA held by PHOENIX or its successors or assigns on the date of RIL’s request. The price to be paid by RIL for each of these shares shall be the pro rata (per share) equivalent of the percentage of the net asset value of REEBOK INIDA which such shares represent of the total outstanding shares of REEBOK INDIA as at the close of business on the acquisition date. This valuation will assume that the “goodwill” of REEBOK INDIA at this date shall be zero. The accounts will be prepared in accordance with US GAAP and will contain accounting provisions for returns, defectives, bad debts and inventory in accordance with REEBOK group policies. The valuation shall be determined by an Ernst & Young auditor appointed by RIL. In the event of a dispute/the final price shall be determined by three arbitrators appointed in the manner set forth in paragraph 11(B) below, who shall have appropriate regard for both parties’ valuations except in no event is any value for goodwill or similar value to be assigned to the shares. In the event that any government regulation or entity prevents the transfer of such shares to RIL, such shares may be transferred to such party as RIL shall designate in writing to PHOENIX. ”
13. As per the above clause, any disputes as to pricing of the shares were to be determined by three arbitrators appointed in the manner set forth in para 11(B).
14. One of the arguments of Mr. Kathpalia, appearing for the Petitioner is that in case of disputes under Section 4, while the procedure for the appointment of the Arbitrators would be determined in the manner as provided in Section 11(B), this did not mean that the arbitration agreement would be governed by the laws of England or that the seat is England. According to him, the sentence relating to the law governing the arbitration agreement, as contained in Section 11(B), applied only to the said section and not to Section 4.
15. This argument though appealing, at first blush, is liable to be rejected for two reasons. First, the disputes, which have been adjudicated by way of the partial award and the final award, are not restricted only to disputes, which arise under Section 4. They relate to contractual disputes outside Section 4 as well. This is clear from a reading of Para 63 of the award which reads as under: - “The Respondent has elaborated a number of variations or sub-divisions of such headings which will be addressed to the extent necessary in the discussion below. What is certain, as recognised by Claimant in its Post-Hearing Submission (Cl. Post-Hearing Brief para. A-1), is that this is not a case of a simple calloption for shares, but a far more complex contractual dispute.”
16. Secondly, the phrase “in the manner set forth in paragraph 11(B) below” has to, in the absence of any intention to the contrary, mean and include the procedures and other stipulations contained in 11(B). If the intention was to include Part-I of the Arbitration Act for disputes in respect of Section 4, considering that there was a clear exclusion in 11(B) with the stipulation that the arbitration agreement is governed by the laws of England, clause 4 would have had a stipulation to the contrary. In the absence of such a specific provision, the intention of the parties clearly is to have the law of England as the law governing the arbitration agreement. It is the settled position in law as laid down in Dozco India Pvt. Ltd. v Doosan Infracore Co. Ltd. (2011) 6 SCC 179 (hereinafter, ‘Dozco’) that the enforcement of the award is governed by the law of the arbitration agreement. The relevant observation of the Supreme Court in Dozco is set out hereinbelow:
73. In view of the aforesaid binding precedent, we are unable to accept the submission of Mr. Ganguli that the Arbitration Act, 1996 has not been excluded by the parties by agreement. For the same reasons, we are unable to approve the conclusions reached by the Delhi High Court that reference to laws of England is only confined to the procedural aspects of the conduct of the arbitration reference.
74. We are also unable to agree with the submission of Mr. Ganguli that since the issues involved herein relate to the public policy of India, Part I of the Arbitration Act, 1996 would be applicable. Applicability of Part I of Arbitration Act, 1996 is not dependent on the nature of challenge to the award. Whether or not the award is challenged on the ground of public policy, it would have to satisfy the precondition that the Arbitration Act, 1996 is applicable to the arbitration agreement. In our opinion, the High Court has committed a jurisdictional error in holding that the provisions contained in Article 33.12 is relevant only for the determination of the curial law applicable too the proceedings. We have already noticed earlier that the parties by agreement have provided that the juridical seat of the arbitration shall be in London. Necessary amendment has also been made in the PSCs, as recorded by the final partial consent award dated 14-9-2011. It is noteworthy that the Arbitration Act, 1996 does not define or mention juridical seat. The term ‘juridical seat’ on the other hand is specifically defined in Section 3 of the English Arbitration Act. Therefore, this would clearly indicate that the parties understood that the arbitration law of England would be applicable to the arbitration agreement........................
76. In view of the above, we hold that: 76.[1] The petition filed by respondents under Section 34 of the Arbitration Act, 1996 in the Delhi High Court is not maintainable. 76.[2] We further over-rule and set aside the conclusion of the High Court that, even though the arbitration agreement would be governed by the laws of England and that juridical seat of arbitration would be in London, Part I of the Arbitration Act would still be applicable as the laws governing the substantive contract are Indian Laws. 76.[3] 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. 76.[4] 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 substantive law governing the con- tract 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.”
19. There has been a considerable debate in the present case between the two parties in respect of the applicability of Bhatia International (supra) and BALCO-I (supra). While it is the submission of the Petitioner that the present case is governed by Bhatia International, Ld. counsel for Respondent on the other hand submits that the case is governed by BALCO-I.
20. The said issue is not germane to the present case, inasmuch as whether one applies Bhatia International or BALCO-I, the consequences would be the same. In Bharat Aluminium Company v Kaiser Aluminium Technical Services Inc. (2016) 4 SCC 126 (hereinafter ‘BALCO-II’), the Supreme Court, in para 14 further clarified the position as under: “14. It is clear that the law applicable to arbitration agreement in the present case is English Law. Once it is found that the law governing the arbitration agreement is English Law, Part I of the Indian Arbitration Act stands impliedly excluded. This has been a long settled position and the latest judgment in Union of India v. Reliance Industries Limited and others reaffirms the same. In the words of R.F. Nariman J.,
21. However, Mr. Kathpalia submitted that BALCO-I (supra) has prospective application and it is Bhatia International(supra), which governs the dispute at hand. Specific reliance is placed on paras 21, 26, 32 & 35 of Bhatia International, which read as under:
32. 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 compulsory 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 apply.......................
35. Lastly it must be stated that the said Act does not appear to be a well drafted legislation. Therefore the High Courts of Orissa, Bombay, Madras, Delhi and Calcutta cannot be faulted for interpreting it in the manner indicated above. However, in our view a proper and conjoint reading of all the provisions indicates that Part I is to apply also to international commercial arbitrations which take place out of India, unless the parties by agreement, express or implied exclude it or any of its provisions. Such an interpretation does not lead to any conflict between any of the provisions of the said Act. On this interpretation there is no lacunae in the said Act. This interpretation also does not leave a party remediless. Thus such an interpretation has to be preferred to the one adopted by the High Courts of Orissa, Bombay, Madras, Delhi and Calcutta. It will therefore have to be held that the contrary view taken by these High Courts is not good law.”
22. Insofar as the facts of the present case are concerned, the only question that needs to be answered in view of the ratio of Bhatia International (supra) is, whether there is an express or implied exclusion of Part-I. Section 11(B) leaves no manner of doubt that the arbitration agreement is governed by English law. The fact that at the initial stage, when the present petition was filed or during the arbitration proceedings, either of the parties may have proceeded under the wrong assumption that Indian Courts would have jurisdiction as Part-I is not excluded, would not result in a change in the legal position. The question, as to whether the petition is maintainable or not, involves the determination of legal issues, on which an admission by either party would be of no relevance. The Court, in this case, has to decide the said issue only on the basis of the clauses in the agreement. The agreement is clear and categorical i.e. the arbitration agreement is governed by the laws of England.
23. The reliance by the Petitioner on the judgment of the Supreme Court in Union of India v. Reliance Industries Limited & Ors. (2015) 10 SCC 213 (hereinafter, ‘Reliance-II’) to argue that the petition is maintainable in view of the observation, in para 21 of the said judgment, is not tenable. The Petitioner relies on para 197 of BALCO-I to argue that since the present agreement is governed by the decision in Bhatia International and there is no express or implied exclusion, coupled with the admission of the Respondent, this Court has jurisdiction. Para 197 of BALCO-I is set out herein below:
24. This decision of BALCO-I has also been subsequently explained by the Supreme Court in Reliance-II (supra). The relevant portion is extracted hereinbelow: “21. The last paragraph of Bharat Aluminium’s judgment has now to be read with two caveats, both emanating from para 32 of Bhatia International itself – that where the Court comes to a determination that the juridical seat is outside India or where law other than Indian law governs the arbitration agreement, Part-I of the Arbitration Act, 1996 would be excluded by necessary implication. Therefore, even in the cases governed by the Bhatia principle, it is only those cases in which agreements stipulate that the seat of the arbitration is in India or on whose facts a judgment cannot be reached on the seat of the arbitration as being outside India that would continue to be governed by the Bhatia principle. Also, it is only those agreements which stipulate or can be read to stipulate that the law governing the arbitration agreement is Indian law which would continue to be governed by the Bhatia rule.
22. On the facts in the present case, it is clear that 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. ”
25. Thus, Reliance-II has clarified the legal position insofar as the cases to which the Bhatia International principle applies.
26. The Petitioner has also relied upon the following observations in Sasan Power Limited v. North American Coal Corporation (India) Private Limited, (2016) 10 SCC 813 (hereinafter, ‘Sasan’).
27. Applying the test in para 42 above, if the parties have agreed to exclude the application of Part-I, then the challenge to the award cannot lie in this Court. The present case is a case of a foreign seated arbitration where one of the parties is not an Indian entity and the law governing the arbitration agreement is clearly English Law, and not Indian law. Even Sasan (supra) does not help the Petitioner’s case.
28. The Petitioner is incorrect in urging that there is an admission by the Respondent that Part I applies. There are further facts/correspondence, exchanged during the course of the arbitration proceedings which also clearly show that the parties understood that the Indian Courts would have no jurisdiction.
1) Procedural Order No.1 dated 25th September, 2008 also records as under: Whereas, Section 11-B of the JV Agreement provides eg., that any disputes arising thereunder are to be submitted to arbitration in London, England and that such arbitration is to be conducted in accordance with the rules in force of the International Court of Arbitration, London, England; … Now, therefore, it is hereby Ordered that:
1. Place of Arbitration: As set out in Section 11-B of the JV Agreement, the Seat of Arbitration shall be London, England, provided that the Arbitral Tribunal may hold meetings and deliberations in any location it may deem desirable, and may, with the agreement of the Parties, hold any or all hearings, examinations, or other meeting requiring the attendance of the Parties or their representatives, in such other location(s) as it may deem convenient or desirable. …
4. Procedural Rules 4.[1] The Arbitration shall be conducted in accordance with the LCIA Arbitration Rules as in effect on 1 January 1998 (The LCIA Rules). No municipal or national rules of procedure shall be applicable, other than the mandatory laws or rules of procedure (if any) applicable in England, the seat of arbitration.”
2) The Respondent had, in its email dated 9th February, 2010, after passing of the partial award taken the stand that the Indian courts would have no jurisdiction. The relevant portion of the said email is extracted hereinbelow. “We note that the Respondent is now threatening to appeal under the Arbitration and Conciliation Act, 1996 (“The Indian Act”). We can see no basis upon which the Indian Courts will accept jurisdiction given that the seat of arbitration is London and the arbitration agreement is governed by English Law.”
29. When the parties chose a juridical seat outside India and provide for the laws of England to apply, the challenge to the award has to be raised in England as per the decision of the Supreme Court in Eitzen Bulk A/S v. Ashapura Minechem Limited & Anr. (2016) 11 SC 508. The Supreme Court held as under:
30. The Petitioner has relied on Gedela Satchidananda Murthy v Dy. Commissioner Endowments Deptt. A.P. and others (2007) 5 SCC 677 to argue that the conduct of the parties would imply that the Part-I of the Act was not excluded. In the present case, though in the reply to the Petitioner, the Respondent simply said “no comment”, the other documents i.e. emails and procedural orders point to the contrary.
31. The fact that in its initial reply filed, the Respondent did not take this objection, does not mean that the objection cannot be raised at this stage. In any event, the Respondent has filed a specific additional reply taking an objection as to the maintainability of the present petition. In Roger Shashoua & Others v. Mukesh Sharma & Others 2017 (14) SCC 722, the Supreme Court has clearly held that even if a party has wrongly approached the Court in India and accepted the applicability of Part-I of the Act, the same would not confer jurisdiction on Indian Courts. The relevant observations are:
32. The issues as to jurisdiction in the case of arbitral proceedings, have been repeatedly decided by the Supreme Court and the ratio of the various judgments is quite clear. Despite the same, there are several disputes pending before various courts, in respect of international commercial arbitrations, where jurisdictional issues continue to be raised. The various decisions rendered in respect of the applicability of Part I would show that where the law of the arbitration agreement is not Indian law, Part I would have no application, in spite of the substantive law governing the contract being Indian law or the venue of the arbitration proceedings being in India. In order to have an easy reference of some of the decisions rendered till date, the following tabular analysis is set out.
┌───────────────────────────────────────────────────────────────────────────────────────────────────────┐ │ Sl. Judgment, Substantive Law of Rules Venue Whether Part-I │ │ No along with law of arbitration governing applies │ │ date of contract agreement procedure │ │ decision │ ├───────────────────────────────────────────────────────────────────────────────────────────────────────┤ │ 1. Bhatia Not specified Not specified ICC Rules Paris, Yes, Part I │ │ Internationa France applicable even to │ │ l v Bulk foreign seated │ │ Trading arbitrations unless │ │ SA(2002) 4 expressly/ │ │ SCC 105. impliedly excluded │ │ OMP 214/2010 & 716/2011 Page 25 of 31 │ │ 2018:DHC:7079 │ │ Decided on │ │ 13th March, │ │ 2002 │ │ 2. Venture Laws of Not specified Rules of Not Bhatia │ │ Global v. State of the London specified International │ │ Satyam Michigan, Court of followed, hence │ │ Corp., United States Arbitration Part I applicable │ │ (2008) 4 │ │ SCC 190. │ │ Decided on │ │ 10th January, │ │ 2008 │ │ 3. Indtel Laws of Not specified Not Not Bhatia │ │ Technical England and specified specified International │ │ Services Wales followed, hence │ │ Private Part I applicable │ │ Limited v. │ │ WS Atkins │ │ Rail │ │ Limited,(200 │ │ 8) 10 SCC │ │ 308. │ │ Decided on │ │ 25th August, │ │ 2008. │ │ 4. Citation Laws of Not specified Not Not Bhatia │ │ Infowares California, specified specified International │ │ Limited v. USA followed, hence │ │ Equinox Part I applicable │ │ Corporation, │ │ (2009) 7 │ │ SCC 220. │ │ Decided on │ │ 20th April, │ │ 2009. │ │ 5. Dozco v. Laws of the Disputes to ICC Rules Seoul, Bhatia │ │ Doosan, Republic of be settled by Korea/ International │ │ (2011) 6 Korea arbitration in such other applied. │ │ SCC 179. South Korea place as Held, Part I had │ │ may be been excluded by │ │ agreed the parties as South │ │ Decided on Korea was held to │ │ 8th October, be the seat, though │ │ 2010. the contract did not │ │ specifically │ │ mention the law │ │ governing the │ │ arbitration │ │ OMP 214/2010 & 716/2011 Page 26 of 31 │ │ 2018:DHC:7079 │ │ agreement │ │ 6. Videocon v. Laws of Laws of Not Contract Bhatia │ │ Union of India England specified designated International │ │ India, (2011) Kuala applied. Part I held │ │ 6 SCC 161. Lumpur, as to be impliedly │ │ Decided on venue. excluded by │ │ 11th May, However, agreeing to laws of │ │ 2011. proceeding England as law │ │ s were later governing the │ │ held at arbitration │ │ London agreement. │ │ 7. Yograj Laws of Seat was Singapore Singapore Bhatia │ │ Infrastructur India Singapore as Internation International │ │ e Limited v. per SIAC al applied. │ │ Ssang Rules Arbitration Held, Part I │ │ Young Centre excluded because │ │ Engineering (SIAC) parties had agreed │ │ and Rules, 2010 for proceedings to │ │ Construction be held in │ │ Company accordance with │ │ Limited, SIAC rules │ │ (2011) 9 │ │ SCC 735. │ │ Decided on │ │ 1st │ │ September, │ │ 2011. │ │ 8. Bharat Laws of Laws of Laws of London, Part I not │ │ Aluminium India England England United applicable to │ │ Company v. Kingdom foreign seated │ │ Kaiser arbitrations. │ │ Aluminium However, decision │ │ Technical applicable │ │ Services prospectively │ │ Inc., (2012) │ │ 9 SCC 552. │ │ Decided on │ │ 6thSeptember │ │ , 2012. │ │ 9. Enercon Laws of “The Not London, Part I to apply, as │ │ (India) India provisions of specified United by making │ │ Limited and the Indian Kingdom applicable the │ │ Others v. Arbitration Indian Arbitration │ │ Enercon and Act, 1996 to the │ │ GMBH and Conciliation proceedings, │ │ Another, Act, 1996 to parties have made a │ │ OMP 214/2010 & 716/2011 Page 27 of 31 │ │ 2018:DHC:7079 │ │ (2014) 5 apply” choice that seat of │ │ SCC 1. arbitration would │ │ Decided on be in India │ │ February 14, │ │ 2014. │ │ 10. Reliance Laws of Laws of UNCITRA London, Pre-BALCO │ │ Industries India England L Rules, United agreement; │ │ Limited and 1985 Kingdom Part I excluded by │ │ Another v. the parties by │ │ Union of having agreed to │ │ India, (2014) English law as the │ │ 7 SCC 603. law governing the │ │ Decided on arbitration │ │ 28th May, agreement │ │ 2014. │ │ 11. Harmony Laws of Arbitration in Small London, Pre-BALCO │ │ Innovation England London and Claims United agreement; │ │ Shipping contract to be Procedure Kingdom Part I impliedly │ │ Limited v. governed by of the excluded as │ │ Gupta Coal English law London contract interpreted │ │ India Maritime to mean that the │ │ Limited and Arbitration seat of arbitration │ │ Another, Association was at London │ │ (2015) 9 for where │ │ SCC 172. dispute of │ │ Decided on claim did │ │ 10th March, not exceed │ │ 2015. $50,000 │ │ 12. Union of Laws of Laws of UNCITRA London, Pre-BALCO │ │ India v. India England L Rules, United agreement; │ │ Reliance 1985 Kingdom Part I excluded by │ │ Industries the parties by │ │ Limited,(201 having agreed to │ │ 5) 10 SCC English law as the │ │ 213. law governing the │ │ Decided on arbitration │ │ 22nd agreement. │ │ September, │ │ 2015. │ │ 13. Bharat Laws of Laws of “English London, Pre-BALCO │ │ Aluminium India England Arbitration United agreement; │ │ Company v. Law” Kingdom Part I impliedly │ │ Kaiser excluded by the │ │ Aluminium parties by having │ │ Technical agreed to English │ │ Services Inc, law as the law │ │ (2016) 4 governing the │ │ SCC 126. arbitration │ │ Decided on agreement │ │ OMP 214/2010 & 716/2011 Page 28 of 31 │ │ 2018:DHC:7079 │ │ 28th January, │ │ 2016. │ │ 14. Eitzen Bulk English law English law Small London, Pre-BALCO │ │ A/S v. Claims United agreement; │ │ Ashapura Procedure Kingdom Part I excluded as │ │ Minechem of London parties had chosen │ │ Limited and Maritime London as the seat │ │ Another, Arbitration of arbitration and │ │ (2016) 11 Association agreed that │ │ SCC 508. where arbitration would │ │ Decided on dispute of be governed by │ │ 13th May, claim did English law │ │ 2016. not exceed │ │ $50,000 │ │ 15. IMAX Laws of Not specified ICC Rules Not Pre-BALCO │ │ Corporation Singapore in the of specified in agreement; │ │ v. E City agreement Arbitration the Part I excluded │ │ Entertainme agreement, because parties │ │ nt (India) however agreed that │ │ Private arbitration arbitration would │ │ Limited, was be conducted │ │ (2017) 5 conducted according to ICC │ │ SCC 331. in London Rules and left place │ │ Decided on pursuant to of arbitration to be │ │ 10th March, fixing of chosen by it, and │ └───────────────────────────────────────────────────────────────────────────────────────────────────────┘
arbitration agreement Rules governing procedure Venue Whether Part-I applies
1. Bhatia Internationa l v Bulk Trading SA(2002) 4 SCC 105. Not specified Not specified ICC Rules Paris, France Yes, Part I applicable even to foreign seated arbitrations unless expressly/ impliedly excluded Decided on 13th March,
2. Venture Global v. Satyam Corp., (2008) 4 SCC 190. 10th January, Laws of State of Michigan, United States Not specified Rules of the London Court of Arbitration Not specified Bhatia International followed, hence Part I applicable
3. Indtel Technical Services Private Limited v. WS Atkins Rail Limited,(200 8) 10 SCC
308. 25th August,
2008. Laws of England and Wales Not specified Not specified Bhatia
4. Citation Infowares Equinox Corporation, (2009) 7 SCC 220. 20th April,
2009. Laws of California, USA Not specified Not specified Bhatia
5. Dozco v. Doosan, (2011) 6 SCC 179. 8th October,
2010. Laws of the Republic of Korea Disputes to be settled by arbitration in South Korea ICC Rules Seoul, Korea/ such other place as may be agreed Bhatia International applied. Held, Part I had been excluded by the parties as South Korea was held to be the seat, though the contract did not specifically mention the law governing the arbitration agreement
6. Videocon v. Union of India, (2011) 6 SCC 161. 11th May,
2011. Laws of India Laws of England Contract designated Kuala Lumpur, as venue. However, proceeding s were later held at London Bhatia International applied. Part I held to be impliedly excluded by agreeing to laws of England as law governing the arbitration agreement.
7. Yograj Infrastructur e Limited v. Ssang Young Engineering and Construction Company Limited, (2011) 9 SCC 735. 1st September,
2011. Laws of India Seat was Singapore as per SIAC Rules Singapore Internation al Centre (SIAC) Rules, 2010 Singapore Bhatia International applied. Held, Part I excluded because parties had agreed for proceedings to be held in accordance with SIAC rules
8. Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552. 6th September, 2012. Laws of India Laws of England Laws of England London, United Kingdom Part I not applicable to foreign seated arbitrations. However, decision applicable prospectively
9. Enercon (India) Limited and Others v. Enercon GMBH and Another, Laws of India “The provisions of the Indian Arbitration and Conciliation Act, 1996 to London, United Kingdom Part I to apply, as by making applicable the Indian Arbitration Act, 1996 to the proceedings, parties have made a (2014) 5 SCC 1. February 14,
2014. apply” choice that seat of arbitration would be in India
10. Reliance Industries Another v. Union of India, (2014) 7 SCC 603. 28th May,
2014. Laws of India Laws of England UNCITRA L Rules, London, United Kingdom Pre-BALCO agreement; Part I excluded by the parties by having agreed to English law as the law governing the arbitration agreement
11. Harmony Innovation Shipping Gupta Coal India Another, (2015) 9 SCC 172. 10th March,
2015. Laws of England Arbitration in London and contract to be governed by English law Small Claims Procedure of the London Maritime Association for where dispute of claim did not exceed $50,000 London, United Kingdom Part I impliedly excluded as contract interpreted to mean that the seat of arbitration was at London
12. Union of India v. Reliance Industries Limited,(201
5) 10 SCC
213. 22nd September,
2015. Laws of India Laws of England UNCITRA L Rules, London, United Kingdom Part I excluded by the parties by having agreed to English law as the law governing the arbitration agreement.
13. Bharat Aluminium Company v. Kaiser Aluminium Technical Services Inc, (2016) 4 SCC 126. Laws of India Laws of England “English Law” London, United Kingdom Part I impliedly excluded by the parties by having agreed to English law as the law governing the arbitration agreement 28th January,
2016.
14. Eitzen Bulk A/S v. Ashapura Minechem Another, (2016) 11 SCC 508. 13th May,
2016. English law English law Small Claims Procedure of London Maritime Association where dispute of claim did not exceed $50,000 London, United Kingdom Part I excluded as parties had chosen London as the seat of arbitration and agreed that arbitration would be governed by English law
15. IMAX Corporation v. E City Entertainme nt (India) Private Limited, (2017) 5 SCC 331. 10th March,
2017. Laws of Singapore Not specified in the agreement ICC Rules of Not specified in the agreement, however arbitration was conducted in London pursuant to fixing of London as the juridical seat in accordance with Article 14(1) of ICC Rules Part I excluded because parties agreed that arbitration would be conducted according to ICC Rules and left place of arbitration to be chosen by it, and ICC chose London after consulting the parties
16. Roger Shashoua v. Mukesh Sharma, (2017) 14 SCC 722. 4th July 2017. Laws of India Not specified ICC Rules London, United Kingdom Part I excluded as agreement interpreted to mean that London was not the mere venue but the juridical seat
17. Union of India v. Hardy Exploration Laws of India Not specified UNICITRA L Model Law Kuala Lumpur, Malaysia Part I not excluded because Kuala and production; Civil Appeal NO. 4628 of 2018. Decided on 25th Septembe r, 2018 Lumpur was only the venue, further no determination of the seat of arbitration either by the parties or by the Arbitral Tribunal under the UNCITRAL Rules
33. The above discussion clearly shows that even in those cases, which are governed by the Bhatia International (supra) principle, it is only when the seat of the arbitration is in India or the arbitration agreement is governed by the Indian law, or where a judgment cannot be reached as to the seat of arbitration that Bhatia International (supra) would continue to govern. In the present case, neither situation exists.
34. Conclusions:
(i) The contract in the present case is pre-BALCO-I.
(ii) It is governed by the principles in Bhatia International (supra).
(iii) The contract clearly specifies that the seat of arbitration is England and the law governing the arbitration agreement is that of England.
(iv) Part-I is clearly excluded in view of these clauses.
(v) The disputes adjudicated in the Award include disputes falling under
(vi) The ambiguity in the Reply filed by the Respondent, as to jurisdiction, cannot vest jurisdiction in this Court.
(vii) The Respondent, even during arbitral proceedings, has taken the stand that Courts in India have no jurisdiction.
(viii) This court, thus, has no jurisdiction to entertain challenges to the
35. The petitions are, accordingly, dismissed. The Petitioner is left to avail its remedies in accordance with the applicable laws. All I.As are disposed of. In the facts and circumstances of the present case, there shall be no order as to costs.
PRATHIBA M. SINGH JUDGE NOVEMBER 01, 2018