India: India and International Commercial Arbitration

INDIA AND INTERNATIONAL COMMERCIAL ARBITRATION[1]

The endeavour in the present article is to analyse and understand the Indian law concerning international arbitrations. The analysis covers the recent amendments introduced in the Indian arbitration law and some recent judgements of the Indian courts with an objective to sense the trend/ attitude of the two actors i.e. the Legislature and Courts towards international arbitrations. The Article also endeavours to study the implications of Part I of the Arbitration and Conciliation Act, 1996 being applicable to an international arbitration and to present a holistic perspective with respect to court's judgement on implied exclusion of the said Part I and consequences thereof.

A.Introduction

1. Lately, there have been conscious efforts by the Indian Parliament and Indian courts to align the Indian arbitration jurisprudence with international norms. The recent amendments introduced in the Arbitration and Conciliation Act, 1996 ("1996 Act") by way of Arbitration and Conciliation (Amendment) Act, 2015 ("2015 Amendment") is a step in this direction. The motivation behind amending the 1996 Act seems to be twofold:

  1. to update the 1996 Act in light of the changes adopted by other jurisdictions; and
  2. to address specific issues faced by Indian courts while interpreting the original / un-amended 1996 Act.  

Some of the key changes introduced through the 2015 Amendment are as follows:

  1. Only the High Courts and Supreme Court to jurisdiction in relation to international commercial arbitrations.[i]
  2. Section 9 (Interim measures), Section 27 (Court assistance in taking evidence) and Sections 37(1) (a) and 37(3) (orders which are appealable) of Part I of the 1996 Act made applicable to international arbitrations, unless expressly excluded by the parties.[ii]
  3. Non signatories to an arbitration agreement may seek reference to arbitration[iii]
  4. Judicial scrutiny while referring the parties to arbitration limited to a prima facie finding of the validity of the arbitration agreement.[iv]
  5. Arbitration proceedings are to be commenced within ninety days after securing an interim order under Section 9.[v]
  6. Time bound decisions to be made by courts on applications seeking constitution of the arbitral tribunal.[vi]
  7. The fee of the arbitrators to domestic arbitrations (except where parties have agreed to determination of fees as per rules of an arbitral institution) to be statutorily regulated.[vii]
  8. Interim measure orders by a tribunal enforceable like an order of court, hence expediting enforcement.[viii]
  9. The arbitral award to be made within a period of twelve months from the date on which the arbitral tribunal enters upon the reference.[ix]
  10. Fast track procedure introduced which requires the award to be rendered within six months from the date on which the arbitral; tribunal enters the reference.[x]
  11. no more automatic stay of award upon filing of objections to the same.[xi]
  12. Public policy as a ground to review the awards narrowed and defined.[xii]

2. Further, on 23 October 2015, the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Act, 2015 came into force. Under Section 10 of the said Act, where the subject matter of an arbitration is a commercial dispute of a specified value, all applications or appeals arising out of an international commercial arbitration under the 1996 Act, shall be heard and disposed of by the specialised commercial courts under the said Act. This is another step to expedite the hearing of matters arising out of international arbitrations.

3. The focus of national courts across jurisdictions world over, with respect to international arbitrations has been on party autonomy and limiting the role of national courts in the arbitral process. Indian courts are also constantly moving in the same direction. In India, a party has an occasion to approach the national courts in connection to an arbitral proceeding at all the three stages i.e. pre-arbitration, during arbitration and post arbitration (enforcement of awards etc.). Indian courts have been upholding the doctrines of minimum interference and party autonomy at all the three stages. In the pre-arbitration stage, a party to an international arbitration can move a jurisdictional court seeking either an anti-suit arbitration or an anti-arbitration injunction. Indian courts have constantly refused to issue an anti-arbitration injunctions and have made parties to stick to their bargain to arbitrate their disputes rather than litigating the same in national courts.[xiii] Indian courts have also refused to interfere with the enforcement foreign arbitral awards.

3.1 In a recent case of Cruz City 1 Mauritius Holdings v. Unitech Limited[xiv] where one of the challenge to enforcement of foreign arbitral award was that the same is in violation of the foreign exchange laws of India, the Delhi High Court refused to interfere and observed as under:

"122. Even if it is accepted that the Keepwell Agreement was designed to induce Cruz City to make investments by offering assured returns, Unitech cannot escape its liability to Cruz City. Cruz City had invested in Kerrush on the assurances held out by Unitech and notwithstanding that Unitech may be liable to be proceeded against for violation of provisions of FEMA, the enforcement of the Award cannot be declined.

123.... And thirdly, if Cruz City has been induced to make an investment on a false assurance of the Keepwell Agreement being legal and valid, Unitech must bear the consequences of violating the provisions of Law, but cannot be permitted to escape their liability under the Award"

3.2 In the case of NTT Docomo Inc v. Tata Sons Limited[xv], a similar objection has been raised by the Reserve Bank of India (RBI)[xvi] with respect to breach of foreign exchange laws in India. The Delhi High Court has negated the objections raised by RBI and rejected its intervention application. The Court inter alia held that RBI has no locus to object to the enforcement of the award as the same is not a party to the arbitration. On the merits of the case, the Court held the subject agreement to be valid and capable of being performed under the applicable laws of India. Interestingly, the Court has also upheld the settlement between the parties, pursuant to which the objections filed by Tatas were withdrawn and the Court has enforced the terms of the settlement agreement under its jurisdiction under Section 49 (Enforcement of foreign awards) of the 1996 Act. [xvii]

3.3 In another recent case of Zee Sports Ltd. v. Nimbus Media Pvt. Ltd.[xviii], wherein the Bombay High Court refused to interfere with the arbitral award on merits relying on the judgement in McDermott International Inc. v. Burn Standard Co. Ltd[xix] , where in the Supreme Court has observed that as under:

"52 The 1996 Act makes provision for the supervisory role of courts, for the review of the arbitral award only to ensure fairness. Intervention of the court is envisaged in few circumstances only, like, in case of fraud or bias by the arbitrators, violation of natural justice, etc. The court cannot correct errors of the arbitrators. It can only quash the award leaving the parties free to begin the arbitration again if it is desired. So, the scheme of the provision aims at keeping the supervisory role of the court at minimum level and this can be justified as parties to the agreement make a conscious decision to exclude the court's jurisdiction by opting for arbitration as they prefer the expediency and finality offered by it."

The Bombay High Court refused to continue the stay against enforcement of the award and imposed a cost of Indian Rupees 2 lakhs.

3.4 Similarly, the Kerala High Court in Emmanuel Cashew Industries v. CHI Commodities Handlers Inc[xx], while dealing with challenge to an arbitral award, interpreting Section 48 of the 1996 Act, which prescribes the conditions for enforcement of foreign awards in India, observed that by merely filing of objections to the foreign award under Section 48 is not enough and the objector has to furnish "proof" of circumstances to satisfy any of the conditions mentioned in Section 48 to refuse enforcement of the foreign award.

4. Above cases are indicative of the trend that Indian courts are taking a pro arbitration stand at every stage of arbitration. However, the applicability of Part I of the 1996 Act to international arbitrations is still a grey area. Part I of the 1996 Act, if held to be applicable to international arbitration makes the arbitral process subject to the scrutiny by Indian courts including granting stay orders against the arbitration proceedings in nature of anti-arbitration injunctions and setting aside arbitral awards on the grounds other than what may be permissible under internationally accepted convention like the New York Convention. 

5. The law before the Balco judgement[xxi] was that the Part I of the 1996 Act would apply to both domestic and international arbitration unless expressly or impliedly excluded by the parties. The Supreme Court, in the landmark Balco Judgement, inter alia upheld the territorial principle and held that arbitrations which are seated outside India will not attract Part I. However, the Balco Judgement has been made applicable prospectively i.e. only to those arbitration agreements which are entered into after 6 September 2012.

6. The Authors have previously analysed the possible scenarios where parties can be deemed to have excluded Part I of the 1996 Act by implication[xxii]. The following table endeavours to show the judicial trend in India with respect to applicability of Part I of the 1996 Act to international arbitrations: 

TITLE OF THE CASE

ARBITRATION CLAUSE

ISSUE

FINDING OF THE COURT

NTPC v. Singer Co.[xxiii]

[T]he laws applicable to this Contract shall be the laws in force in India. The courts of Delhi shall have exclusive jurisdiction in all matters arising under this contract." (7.2).

27.7 In the event of foreign contractor, the arbitration shall be conducted by three arbitrators, one each to be nominated by the owner and the contractor and the third to be named by the President of the International Chamber of Commerce, Paris. Save as above all rules of conciliation and arbitration of the International Chamber of Commerce shall apply to such arbitrations. The arbitration shall be conducted at such places as the arbitrators may determine

Issue: "7. The point for consideration is whether the High Court was right in rejecting the appellant's application filed under the provisions of the Arbitration Act, 1940 and in holding that the award which was made in London on an arbitration agreement was not governed by the law of India and that it was a foreign award within the meaning of the Foreign Awards Act and beyond the jurisdiction of the Indian Courts except for the purpose of recognition and enforcement under the latter Act."

"27. The proper law of the contract in the present case being expressly stipulated to be the laws in force in India and the exclusive jurisdiction of the courts in Delhi in all matters arising under the contract having been specifically accepted, and the parties not having chosen expressly or by implication a law different from the Indian law in regard to the agreement contained in the arbitration clause, the proper law governing the arbitration agreement is indeed the law in force in India, and the competent courts of this country must necessarily have jurisdiction over all matters concerning arbitration. Neither the rules of procedure for the conduct of arbitration contractually chosen by the parties (the ICC Rules) nor the mandatory requirements of the procedure followed in the courts of the country in which the arbitration is held can in any manner supersede the overriding jurisdiction and control of the Indian law and the Indian courts.

51. In sum, it may be stated that the law expressly chosen by the parties in respect of all matters arising under their contract, which must necessarily include the agreement contained in the arbitration clause, being Indian law and the exclusive jurisdiction of the courts in Delhi having been expressly recognised by the parties to the contract in all matters arising under it, and the contract being most intimately associated with India, the proper law of arbitration and the competent courts are both exclusively Indian, while matters of procedure connected with the conduct of arbitration are left to be regulated by the contractually chosen rules of the ICC to the extent that such rules are not in conflict with the public policy and the mandatory requirements of the proper law and of the law of the place of arbitration. The Foreign Awards Act, 1961 has no application to the award in question which has been made on an arbitration agreement governed by the law of India".

Sumitomo Heavy Industries Ltd.

Vs.

ONGC Ltd. and Ors[xxiv]

"17.0 Laws/Arbitration

17.1 Applicable Laws

All questions, disputes or differences arising under, out of or in connection with this contract shall be subject to the laws of India.

17.2 Arbitration

If any dispute, difference or question shall at any time hereafter arise between the parties hereto or their respective representatives or assigns in respect of the construction of these presents or concerning anything herein contained or arising out of these presents or as to the rights, liabilities or duties of the said parties hereunder which cannot be mutually resolved by the parties, the same shall be referred to arbitration, the proceedings of which shall be held at London, U.K. Within 30 days of the receipt of the notice of intention of appointing arbitrators each party shall appoint an arbitrator of its own choice and inform the other party. Before entering upon the arbitration, the two arbitrators shall appoint an umpire. In case the parties fail to appoint its arbitrator within 30 days from the receipt of a notice from the other party in this behalf or if any dispute in selection of umpire, the President of International Chamber of Commerce, Paris, shall appoint the arbitrator and/or the umpire as the case may be.

The decision of the arbitrators and failing to an agreed decision by them, the decision of the umpire shall be final and binding on the parties.

The arbitration proceedings shall be held in accordance with the provision of International Chamber of Commerce and the rules made thereunder as amended from time to time. The arbitration proceedings shall be conducted in English language."

Issue: "7....What is the area of operation of the curial law."

"11. The conclusion that we reach is that the curial law operates during the continuance of the proceedings before the arbitrator to govern the procedure and conduct thereof. The courts administering the curial law have the authority to entertain applications by parties to arbitrations being conducted within their jurisdiction for the purpose of ensuring that the procedure that is adopted in the proceedings before the arbitrator conforms to the requirements of the curial law and for reliefs incidental thereto. Such authority of the courts administering the curial law ceases when the proceedings before the arbitrator are concluded."

17. The law which would apply to the filing of the award, to its enforcement and to its setting aside would be the law governing the agreement to arbitrate and the performance of that agreement. Having regard to the clear terms of Clause 17 of the contract between the appellant and the first respondent, we are in no doubt that the law governing the contract and the law governing the rights and obligations of the parties arising from their agreement to arbitrate, and, in particular, their obligation to submit disputes to arbitration and to honour the award, are governed by the law of India; nor is there any dispute in this behalf.."

Bhatia International[xxv]

Arbitration was to be conducted as per ICC Rules at Paris. However, the actual clause is not reproduced in the Judgment.

Issue: Whether Part I of the 1996 Act applies to international commercial arbitrations.

"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 apply to international commercial arbitrations held out of India, the intention of the legislature appears to be to ally (sic allow) parties to provide by agreement that Part I or any provision therein will not apply. Thus in respect of arbitrations which take place outside India even the nonderogable provisions of Part I can be excluded. Such an agreement may be express or implied.

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 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 apply."

Shreejee Traco (I) (P) Ltd. v. Paperline International Inc.[xxvi]

"Any disputes or claims will be submitted to arbitration in New York."

whether the Chief Justice of India or his designate within the meaning of Section 11 of the Act would be competent to appoint an arbitrator.[xxvii]

"7.... in the absence of express choice of the law governing the contract as a whole or the arbitration agreement as such having been exercised by the parties, a presumption may arise that the law of the country where the arbitration is agreed to be held is the proper law of the arbitration agreement. The presumption is rebuttable. The parties have the freedom to choose the law governing an international commercial arbitration agreement. Where there is no express choice of the law governing the contract as a whole, or the arbitration agreement in particular, there is, in the absence of any contrary indication, a presumption that the parties have intended that the proper law of the contract as well as the law governing the arbitration agreement are the same as law of the country in which the arbitration is agreed to be held. There is nothing in the contract or correspondence between the parties to rebut the ordinary presumption and spell out an intention of the parties that they intended proper law of India to govern arbitration in spite of the place of arbitration having been agreed to be at New York."

National Agricultural Coop. Marketing Federation India Ltd. v. Gains Trading Ltd[xxviii]

"17. Arbitration.—Any dispute arising out of or in this connection with this contract or the execution thereof shall, to the extent possible, be settled amicably by negotiation and mutual agreement between the seller and the buyer. If no settlement can be reached in this way, the matter in dispute shall then be referred to and finally resolved by arbitration in Hong Kong in accordance with the provisions of the Arbitration and Conciliation Act, 1996 or any other statutory modification, enactment or amendment thereof for the time being in force."

Issue: "(i) Whether an arbitration clause comes to an end, if the contract containing such arbitration agreement, was abrogated?

(ii) Whether Section 11 of the Act is inapplicable in regard to the arbitrations which are to take place outside India?

(iii) Whether the appointment of the arbitrator, and the reference arbitration are governed by the laws in force in Hong Kong and not by the Arbitration and Conciliation Act, 1996?"

"9. ..... When read normally, the arbitration clause makes it clear that the matter in dispute shall be referred to and finally resolved by arbitration in accordance with the provisions of the Arbitration and Conciliation Act, 1996 (or any statutory modification, enactment or amendment thereof) and the venue of arbitration shall be Hong Kong. This interpretation does not render any part of the arbitration clause meaningless or redundant. Merely because the parties have agreed that the venue of arbitration shall be Hong Kong, it does not follow that laws in force in Hong Kong will apply. The arbitration clause states that the Arbitration and Conciliation Act, 1996 (an Indian statute) will apply. Therefore, the said Act will govern the appointment of arbitrator, the reference of disputes and the entire process and procedure of arbitration from the stage of appointment of arbitrator till the award is made and executed/given effect to".

Venture Global[xxix]

(b) This agreement shall be construed in accordance with and governed by the laws of the State of Michigan, United States, without regard to the conflicts of law rules of such jurisdiction. Disputes between the parties that cannot be resolved via negotiations shall be submitted for final, binding arbitration to the London Court of Arbitration.

(c) Notwithstanding anything to the contrary in this agreement, the shareholders shall at all times act in accordance with the Companies Act and other applicable Acts/rules being in force, in India at any time."

whether the aggrieved party is entitled to challenge the foreign award which was passed outside India in terms of Sections 9/34 of the Act[xxx]

"44. The non obstante clause would override the entirety of the agreement including Clause (b) which deals with settlement of the dispute by arbitration. Clause (c), therefore, would apply to the enforcement of the award which declares that, notwithstanding that the proper law or the governing law of the contract is the law of the State of Michigan, their shareholders shall at all times act in accordance with the Companies Act and other applicable Acts/rules being in force in India at any time. ....."

47. In terms of the decision in Bhatia International., we hold that Part I of the Act is applicable to the award in question even though it is a foreign award. We have not expressed anything on the merits of claim of both the parties. It is further made clear that if it is found that the court in which the appellant has filed a petition challenging the award is not competent and having jurisdiction, the same shall be transferred to the appropriate court."

Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail Ltd[xxxi]

"13. Settlement of disputes 13.1. This agreement, its construction, validity and performance shall be governed by and construed in accordance with the laws of England and Wales;

13.2. Subject to Clause 13.3 all disputes or differences arising out of, or in connection with, this agreement which cannot be settled amicably by the parties shall be referred to adjudication;

13.3. If any dispute or difference under this agreement touches or concerns any dispute or difference under either of the sub-contract agreements, then the parties agree that such dispute or difference hereunder will be referred to the adjudicator or the courts as the case may be appointed to decide the dispute or difference under the relevant sub-contract agreement and the parties hereto agree to abide by such decision as if it were a decision under this agreement."

"... primarily two questions were required to be answered in this matter, namely:

(i) Whether Clauses 13.2 and 13.3 of the memorandum of understanding can be construed to be an arbitration agreement; and

(ii) Whether having regard to Clause 13.1 of the memorandum of understanding indicating that the construction, validity and performance of the agreement would be governed by and constructed in accordance with laws of England and Wales, this Court would have jurisdiction to appoint an arbitrator under Section 11 of the Arbitration and Conciliation Act, 1996."

36. "..... it is fairly well settled that when an arbitration agreement is silent as to the law and procedure to be followed in implementing the arbitration agreement, the law governing the said agreement would ordinarily be the same as the law governing the contract itself. The decisions cited by Mr Tripathi and the views of the jurists referred to in NTPC support such a proposition. What, however, distinguishes the various decisions and views of the authorities in this case is the fact that in Bhatia International this Court laid down the proposition that notwithstanding the provisions of Section 2(2) of the Arbitration and Conciliation Act, 1996, indicating that Part I of the said Act would apply where the place of arbitration is in India, even in respect of international commercial agreements, which are to be governed by the laws of another country, the parties would be entitled to invoke the provisions of Part I of the aforesaid Act and consequently the application made under Section 11 thereof would be maintainable."

Citation Infowares Ltd. v. Equinox Corp.[xxxii]

"10. Any dispute between the parties hereto arising from this Agreement, or from an individual agreement concluded on the basis thereof, shall be finally referred to a mutually agreed Arbitrator.

"10.1 Governing law- This agreement shall be governed by and interpreted in accordance with the laws of California, USA and matters of dispute, if any, relating to this agreement or its subject matter shall be referred for arbitration to a mutually agreed Arbitrator.

"12. .... the question that has arisen is whether this Court would have the jurisdiction in the present factual scenario and on the backdrop of the fact that the parties vide the aforementioned Clause 10.1 had agreed that the governing law would be that of California, USA."

"26. In my opinion the scope of the expressions in para 23 of NTPC case must be held to be limited. There may be presumption where the parties have agreed to hold arbitration in a particular country. In that circumstance, the presumption would arise that the law of the country where the arbitration is agreed to be held would apply as a law of contract. Where there has been no specific expression about the law of contract, the situation is otherwise. In this case the law of contract is agreed upon as the Californian law.

27. However, there is no agreement in respect of the law governing the procedure of arbitration.

32...if the parties intended specifically in this case that the law governing the contract was Californian law, as expressed in Bhatia International as well as in Indtel Technical Services case, an implied exclusion of Part I should be presumed. I am afraid it is not possible to read such an implied exclusion. Seeing the striking similarity between Clause 10.1 in the instant case and Clauses 13.1 and 13.2 in Indtel case which have been quoted above and further the view expressed by the learned Judge in Indtel Technical Services case regarding the exclusion, it is not possible to even distantly read such an implied exclusion of Part I. It cannot be forgotten that one of the contracting parties is the Indian party. The obligations under the contract were to be completed in India. Further, considering the nature of the contract, it is difficult to read any such implied exclusion of Part I in the language of Clause 10.1. That argument of learned Senior Counsel for the respondent therefore must be rejected."

Videocon Industries Ltd. v. Union of India[xxxiii]

"33.1. Indian law to govern.—Subject to the provisions of Article 34.12, this contract shall be governed and interpreted in accordance with the laws of India.

.....

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."

"Whether the Delhi High Court could entertain the petition filed by the respondents under Section 9 of the Arbitration and Conciliation Act, 1996 (for short "the Act") for grant of a declaration that Kuala Lumpur (Malaysia) is the contractual and juridical seat of arbitration and for issuance of a direction to the Arbitral Tribunal to continue the hearing at Kuala Lumpur in terms of Clause 34 of the Production Sharing Contract (PSC), is the question which arises for consideration in this appeal."

33. 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.

Dozco India Private Ltd. v. Doosan Infracore Company Ltd[xxxiv]

Article 22. Governing Laws — 22.1: This agreement shall be governed by and construed in accordance with the laws of The Republic of Korea.

Article 23. Arbitration — 23.1: All disputes arising in connection with this agreement shall be finally settled by arbitration in Seoul, Korea (or such other place as the parties may agree in writing), pursuant to the rules of agreement then in force of the International Chamber of Commerce."

"5. The respondent, therefore, contended that the petitioner would not be entitled to maintain the present proceedings in India by invoking the provisions of the Act. The respondent specifically disputes the stand of the petitioner that there is nothing in the agreement to deny the applicability of Indian procedural law seeking appointment of arbitrator. The respondent also specifically contended that there is express exclusion of Indian courts and/or the applicability of the Act.

"20. In that view, my inferences are that:

(i) The clear language of Articles 22 and 23 of the distributorship agreement between the parties in this case spells out a clear agreement between the parties excluding Part I of the Act.

(ii) The law laid down in Bhatia International v. Bulk Trading S.A. and Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail Ltd., as also in Citation Infowares Ltd. v. Equinox Corpn. is not applicable to the present case.

(iii) Since the interpretation of Article 23.1 suggests that the law governing the arbitration will be Korean Law and the seat of arbitration will be Seoul in Korea, there will be no question of applicability of Section 11(6) of the Act and the appointment of arbitrator in terms of that provision.

Yograj  Infrastructure Ltd. v. Ssang Yong Engg. and Construction Co. Ltd[xxxv]

"27. Arbitration.

27.1 All disputes, differences arising out of or in connection with the Agreement shall be referred to arbitration. The arbitration proceedings shall be conducted in English in Singapore in accordance with the Singapore International Arbitration Centre (SIAC) Rules as in force at the time of signing of this Agreement. The arbitration shall be final and binding.

27.2 The arbitration shall take place in Singapore and be conducted in English language.

27.3 None of the Party shall be entitled to suspend the performance of the Agreement merely by reason of a dispute and/or a dispute referred to arbitration.

"32. Clause 28 of the Agreement describes the governing law and provides as follows:

This agreement shall be subject to the laws of India. During the period of arbitration, the performance of this agreement shall be carried on without interruption and in accordance with its terms and provisions".

"(i) whether the Indian courts would have jurisdiction to entertain an appeal under Section 37 of the Arbitration and Conciliation Act, 1996, against an interim order passed by the Arbitral Tribunal with its seat in Singapore?

(ii) whether the "law of arbitration" would be the International Arbitration Act, 2002, of Singapore? and

(iii) whether the "curial law" would be the laws of Singapore?"

"38. Having agreed to the above, it was no longer available to the Appellant to contend that the "proper law" of the agreement would apply to the arbitration proceedings. The decision in Bhatia International v. Bulk Trading S.A., which was applied subsequently in the case of Venture Global Engg. v. Satyam Computer Services Ltd. and Citation Infowares Ltd. v. Equinox Corporation, would have no application once the parties agreed by virtue of Clause 27.1 of the Agreement that the arbitration proceedings would be conducted in Singapore, i.e., the seat of arbitration would be in Singapore, in accordance with the Singapore International Arbitration Centre Rules as in force at the time of signing of the Agreement.

...In the instant case, once the parties had specifically agreed that the arbitration proceedings would be conducted in accordance with the SIAC Rules, which includes Rule 32, the decision in Bhatia International and the subsequent decisions on the same lines, would no longer apply in the instant case where the parties had willingly agreed to be governed by the SIAC Rules."

Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.[xxxvi]

"17.1. Any dispute or claim arising out of or relating to this agreement shall be in the first instance, endeavoured to be settled amicably by negotiation between the parties hereto and failing which the same will be settled by arbitration pursuant to the English arbitration law and subsequent amendments thereto.

17.2. The arbitration proceedings shall be carried out by two arbitrators, one appointed by Balco and one by Kaiser chosen freely and without any bias. The Court of Arbitration shall be held wholly in London, England and shall use English language in the proceeding. The findings and award of the Court of Arbitration shall be final and binding upon the parties.

***

22.Governing law.—This agreement will be governed by the prevailing law of India and in case of arbitration, the English law shall apply."

Does Section 2(2) bar the application of Part I to arbitrations which take place outside India?

Does Section 2(7) indicate that Part I applies to arbitrations held outside India?

194. In view of the above discussion, we are of the considered opinion that the Arbitration Act, 1996 has accepted the territoriality principle which has been adopted in the Uncitral Model Law. Section 2(2) makes a declaration that Part I of the Arbitration Act, 1996 shall apply to all arbitrations which take place within India. We are of the considered opinion that Part I of the Arbitration Act, 1996 would have no application to international commercial arbitration held outside India. Therefore, such awards would only be subject to the jurisdiction of the Indian courts when the same are sought to be enforced in India in accordance with the provisions contained in Part II of the Arbitration Act, 1996. In our opinion, the provisions contained in the Arbitration Act, 1996 make it crystal clear that there can be no overlapping or intermingling of the provisions contained in Part I with the provisions contained in Part II of the Arbitration Act, 1996.

196. We conclude that Part I of the Arbitration Act, 1996 is applicable only to all the arbitrations which take place within the territory of India.

Reliance Industries Limited and Another v. Union of India[xxxvii]

"32. Applicable law and language of the contract:

32.1. Subject to the provisions of Article 33.12, this contract shall be governed and interpreted in accordance with the laws of India.

32.2. Nothing in this contract shall entitle the Government or the contractor to exercise the rights, privileges and powers conferred upon it by this contract in a manner which will contravene the laws of India.

32.3. .....

33. Sole expert, conciliation and arbitration:

33.12. The venue of conciliation or arbitration proceedings pursuant to this article, unless the parties otherwise agree, shall be London, England and shall be conducted in the English language. The arbitration agreement contained in this Article 33 shall be governed by the laws of England. 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."

"37. ...whether Part I of the Arbitration Act, 1996 would be applicable to the arbitration agreement irrespective of the fact that the seat of arbitration is outside India."

60. In this case, the parties have by agreement provided that the juridical seat of arbitration will be in London. On the basis of the aforesaid agreement, necessary amendment has been made in the PSCs. On the basis of the agreement and the consent of the parties, the Arbitral Tribunal has made the "final partial consent award" on 14-9-2011 fixing the juridical seat (or legal place) of arbitration for the purposes of arbitration initiated under the claimants' notice of arbitration dated 16-12-2010 in London, England. To make it even further clear that the award also records that any hearing in the arbitration may take place in Paris, France, Singapore or any other location the Tribunal considers convenient. Article 33.12 stipulates that arbitration proceedings shall be conducted in English language. The arbitration agreement contained in Article 33 shall be governed by the laws of England. A combined effect of all these factors would clearly show that the parties have by express agreement excluded the applicability of Part I of the Arbitration Act, 1996 (Indian) to the arbitration proceedings.

Sakuma Exports v Louis Dreyfus Commodities Suisse S.A[xxxviii]

"This contract is subject to the Rules of The Refined Sugar Association, London as fully as if the same had been expressly inserted herein, whether or not either or both parties to it are Members of the Association.

If any provision of this contract is inconsistent with the Rules, said provisions shall prevail."

"Arbitration: All disputes arising out of or in conjunction with this Contract shall be referred to the Refined Sugar Association, London for settlement in accordance with the Rules relating to Arbitration. This Contract shall be governed by and construed in accordance with English Law."

"The issue which falls for determination in the appeal is whether parties in this case by their agreement, express or implied, have excluded all or any of the provisions of Part-I of the Act of 1996."[xxxix]

"5. Since one of the terms and conditions of the agreement makes the contract subject to the Rules of the Refined Sugar Association, London by treating the same to have been expressly inserted in the agreement, Rule 8 of the Refined Sugar Association, London leaves no manner of doubt that the parties have not only accepted English law as the law governing the contract but the disputes and the arbitration shall also be governed by the law of England. The seat of Arbitration is admittedly England.

Enercon (India) Ltd. v. Enercon GmbH[xl]

"17. Governing law

17.1 This agreement and any dispute or 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

18.3 The proceedings in such arbitration shall be conducted in English. The venue of the arbitration proceedings shall be in London. The arbitrators may (but shall not be obliged to) award costs and reasonable expenses (including reasonable fees of counsel) to the party(ies) that substantially prevail on merit. The provisions of the Indian Arbitration and Conciliation Act, 1996 shall apply.

The reference of any matter, dispute or claim or arbitration pursuant to this Section 18 or the continuance of any arbitration proceedings consequent thereto or both will in no way operate as a waiver of the obligations of the parties to perform their respective obligations under this agreement."

"71.5. (v) In case the arbitration clause is held to be workable, is the seat of arbitration in London or in India?

71.6. (vi) In the event it is held that the seat is in India, would the English courts have the concurrent jurisdiction for taking such measures as required in support of the arbitration as the venue for the arbitration proceedings is London?

"114... curial law of England would become applicable only if there was clear designation of the seat in London. Since the parties have deliberately chosen London as a venue, as a neutral place to hold the meetings of arbitration only, it cannot be accepted that London is the seat of arbitration. .... If seat is in London, then challenge to the award would also be in London. But the parties having chosen the Indian Arbitration Act, 1996—Chapters III, IV, V and VI; Section 11 would be applicable for appointment of arbitrator in case the machinery for appointment of arbitrators agreed between the parties breaks down. This would be so since the ratio laid down in Bhatia will apply i.e. Part I of the Indian Arbitration Act, 1996 would apply even though the seat of arbitration is not in India. This position has been reversed in Balco, but only prospectively. Balco would apply to the agreements on or after 6-9-2012. Therefore, to interpret that London has been designated as the seat would lead to absurd results

Harmony Innovation Shipping Ltd. v.

Gupta Coal India Ltd. & Anr.[xli]

"5. If any dispute or difference should arise under this charter, general average/arbitration in London to apply, one to be appointed by each of the parties hereto, the third by the two so chosen, and their decision or that of any two of them, shall be final and binding, and this agreement may, for enforcing the same, be made a rule of Court. Said three parties to be commercial men who are the members of the London Arbitrators Association. This contract is to be governed and construed according to English Law. For disputes where total amount claim by either party does not exceed USD 50,000 the arbitration should be conducted in accordance with small claims procedure of the London Maritime Arbitration Association."

"The issue that has emanated for consideration in this appeal is whether in the obtaining factual matrix, especially regard being had to the nature of the arbitration clause, the High Court is justified in setting aside the order passed by the learned Additional District Judge, Ernakulam on 25.9.2014 in I.A. No. 4345 of 2014 in O.P. (ARB) No. 802/2014 directing the first respondent therein to furnish security for US$ 11,15,400 or its equivalent (approximate) Indian Rupees 6,60,00,000/- or to show cause on or before 01.10.2014, and as an interim measure conditionally attaching the cargo belonging to the first respondent herein, while dealing with an application moved under Section 9 of the Arbitration and Conciliation Act, 1996 (for brevity, "the Act"), on the foundation that Section 9 of the Act is limited to the applications to arbitration that takes place in India and has no applicability to arbitration which takes place outside India in view of the pronouncement in Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. inasmuch as clause 5 of the contract which is the arbitration clause clearly spells out that the contract is to be governed and construed according to English law and if the dispute of the claim does not exceed USD 50,000, the arbitration should be conducted in accordance with small claims procedure of the London Maritime Arbitration Association."

"44. ...... As we perceive, it forms as a part of the arbitration clause. There is ample indication through various phrases like "arbitration in London to apply", arbitrators are to be the members of the "London Arbitration Association" and the contract "to be governed and construed according to English Law". It is worth noting that there is no other stipulation relating to the applicability of any law to the agreement. There is no other clause anywhere in the contract. That apart, it is also postulated that if the dispute is for an amount less than US $ 50000 then, the arbitration should be conducted in accordance with small claims procedure of the London Maritime Arbitration Association. When the aforesaid stipulations are read and appreciated in the contextual perspective, "the presumed intention" of the parties is clear as crystal that the juridical seat of arbitration would be London.

46. Thus, interpreting the clause in question on the bedrock of the aforesaid principles it is vivid that the intended effect is to have the seat of arbitration at London. The commercial background, the context of the contract and the circumstances of the parties and 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.

47. 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."

Eitzen Bulk A/S v. Ashapura Minechem Ltd.[xlii]

28. Any dispute arising under this C.O.A. is to be settled and referred to Arbitration in London. One Arbitrator to be employed by the Charterers and one by the Owners and in case they shall not agree then shall appoint an Umpire whose decision shall be final and binding, the Arbitrators and Umpire to be Commercial Shipping Men. English Law to apply. Notwithstanding anything to the contrary agreed in the C.O.A., all disputes where the amount involved is less that USD 50,000/- (fifty thousand) the Arbitration shall be conducted in accordance with the Small Claims Procedure of L.M.A.A.

24. Thus, the main question on which contentions were advanced by the learned counsel for the parties is whether Part I of the Arbitration Act is excluded from its operation in case of a foreign award where the arbitration is not held in India and is governed by foreign law

The question is whether the above stipulations show the intention of the parties to expressly or impliedly exclude the provisions of Part I to the arbitration, which was to be held outside India i.e. in London. We think that the clause evinces such an intention by providing that the English law will apply to the arbitration. The clause expressly provides that Indian law or any other law will not apply by positing that English law will apply. The intention is that English law will apply to the resolution of any dispute arising under the law. This means that English law will apply to the conduct of the arbitration. It must also follow that any objection to the conduct of the arbitration or the award will also be governed by English law. Clearly, this implies that the challenge to the award must be in accordance with English law. There is thus an express exclusion of the applicability of Part I to the instant arbitration by Clause 28. In fact, Clause 28 deals with not only the seat of arbitration but also provides that there shall be two arbitrators, one appointed by the charterers and one by the owners and they shall appoint an umpire, in case there is no agreement. In this context, it may be noted that the Indian Arbitration and Conciliation Act, 1996 makes no provision for umpires and the intention is clearly to refer to an umpire contemplated by Section 21 of the English Arbitration Act, 1996. It is thus clear that the intention is that the arbitration should be conducted under the English law i.e. the English Arbitration Act, 1996. It may also be noted that Sections 67, 68 and 69 of the English Arbitration Act provide for challenge to an award on grounds stated therein. The intention is thus clearly to exclude the applicability of Part I to the instant arbitration proceedings.

7. Below is a matrix segregating components of arbitration agreements (or as interpreted by the court) and the applicability of Part I in respect to the above cases:

CASE

PROPER LAW OF THE MAIN CONTRACT/ SUBSTANTIVE LAW

PROPER LAW OF THE ARBITRATION AGREEMENT

CURIAL/ PROCEDURAL LAW OF THE ARBITRATION AGREEMENT

SEAT

PLACE/ VENUE

EXCLUSIVE JURISDICTION

APPLICABLITY OF PART I

NTPC v. Singer Co.[xliii]

Bench Strength: 2 Judges

Proceedings: Sections 14, 30 and 33 of the Arbitration Act, 1940

√ (Indian law)

[xliv] (Indian law)

√ (ICC Rules)

None

None

√ (Courts of Delhi)

Applicable

Sumitomo Heavy Industries Ltd. v. ONGC Ltd. and Ors[xlv]

Bench Strength: 3 Judges

Proceedings: Appellate

√ (Indian law)

None

√ (ICC Rules)

None

√ (London)

None

Applicable

Bhatia International[xlvi]

Bench Strength: 3 Judges

Proceedings: Appellate proceeding against rejection of Petition under Section 9 of the 1996 Act (Rejection of interim measure)

   None

None

√ (ICC Rules)

None

√ (Paris)

None

Applicable

Shreejee Traco (I) (P) Ltd. v. Paperline International Inc.[xlvii]

Bench Strength: Single Judge

Proceedings: Section 11 of the 1996 Act (Appointment of Arbitrator)

None

None

None

None

√ (New York)

None

Applicable[xlviii]

National Agricultural Coop. Marketing Federation India Ltd. v. Gains Trading Ltd[xlix]

Bench Strength: Single Judge

Proceedings: Section 11 of the 1996 Act (Appointment of Arbitrator)

None

None

√ (1996 Act)

None

√ (Hong Kong)

None

Applicable

Venture Global[l]

Bench Strength: 2 Judges

Proceedings: Appeal against rejection to set aside the arbitral award.

In issue

None

None

None

None

None

Applicable

Indtel Technical Services (P) Ltd. v. W.S. Atkins Rail Ltd[li]

Bench Strength: Single Judge

Proceedings: Section 11 of the 1996 Act (Appointment of Arbitrator)

√ (English law)

None

None

None

None

None

Applicable

Citation Infowares Ltd. v. Equinox Corp.[lii]

Bench Strength: Single Judge

Proceedings: Section 11 of the 1996 Act (Appointment of Arbitrator)

√ (Laws of California, USA)

None

None

None

None

None

Applicable

Videocon Industries Ltd. v. Union of India[liii]

Bench Strength: 2 Judges

Proceedings: Appeal against Section 9 proceedings.

√(Indian law)

√(English law)

None

None

√(Kuala Lumpur, Malaysia)

None

Not applicable

Dozco India Private Ltd. v. Doosan Infracore Company Ltd[liv]

Bench Strength: Single Judge

Proceedings: Section 11 of the 1996 Act (Appointment of Arbitrator)

√(Korean law)

None

√(ICC Rules)

None

√(Korea)

None

Not applicable

Yograj Infrastructure Ltd. v. Ssang Yong Engg. and Construction Co. Ltd[lv]

Bench Strength: 2 Judges

Proceedings: Appeal from Section 37 Proceeding.

√(Indian)

None

√(SIAC Rules)

None

√(Singapore)

None

Not applicable

Reliance Industries Limited and Another v. Union of India[lvi]

Bench Strength: 2 Judges

Proceedings: Appeal from Section 34 Proceeding

√(Indian law)

√(English law)

None

[lvii] (London)

√(London)

None

Not applicable

Sakuma Exports v Louis Dreyfus Commodities Suisse S.A[lviii]

Bench Strength: 2 Judges

Proceedings: Appeal against Section 34 proceeding.

√(English law)

None

√(The Refined Sugar Association, London)

England

None

None

Not applicable

Enercon (India) Ltd. v. Enercon GmbH[lix]

Bench Strength: Single Judge

Proceedings: Section 11 of the 1996 Act (Appointment of Arbitrator)

√(Indian law)

None

√(1996 Act)

[lx] (India)

√(London)

None

Applicable

Harmony Innovation Shipping Ltd. v. Gupta Coal India Ltd. & Anr.[lxi]

Bench Strength: 2 Judges

Proceedings: Sections 9/47 and 49 of the 1996 Act

√(English Law)

None

√(London Maritime Arbitration Association)

[lxii] (London)

√(London)

None

Not applicable

8. New Cases On Applicability Of Part I Of The 1996 Act

8.1 After the decision of the Supreme Court in Harmony case, the issue of applicability of Part I of the 1996 Act arose in the case of Eitzen Bulk A/S v. Ashapura Minechem Ltd.[lxiii]  The arbitration clause in the Eitzen case is reproduced herein below:

"28. Any dispute arising under this COA is to be settled and referred to arbitration in London. One arbitrator to be employed by the charterers and one by the owners and in case they shall not agree then shall appoint an umpire whose decision shall be final and binding, the arbitrators and umpire to be commercial shipping men. English law to apply. Notwithstanding anything to the contrary agreed in the COA, all disputes where the amount involved is less than USD 50,000 (fifty thousand) the arbitration shall be conducted in accordance with the small claims procedure of LMAA."

8.2 The Indian party contended that Indian courts will have jurisdiction under Part I of the 1996 Act and the award can be challenged in India under the said Part I. Gujarat High Court and Bombay High Court gave a conflicting decision on the jurisdiction of Indian courts under Part I of the 1996 Act. While the Gujarat High Court held that the Indian court shall have the jurisdiction to adjudicate the foreign award under Part I of the 1996 Act, , the Bombay High Court ruled against applicability of Part I of the 1996 Act.

8.3 If we break down the arbitration clause as per the above table, the variables would appear as under:

CASE

PROPER LAW OF THE MAIN CONTRACT/ SUBSTANTIVE LAW

PROPER LAW OF THE ARBITRATION AGREEMENT

CURIAL/ PROCEDURAL LAW OF THE ARBITRATION AGREEMENT

SEAT

PLACE/ VENUE

EXCLUSIVE JURISDICTION

APPLICABLITY OF PART I

Eitzen Bulk A/S v. Ashapura Minechem Ltd.

Bench Strength: 2 Judges

Proceedings: Sections 34,47, 48 and 49 of the 1996 Act

English law

None

√(London Maritime Arbitration Association)

London[lxiv]

London

None

Not applicable

8.4 From the analysis of the above variables and based on the Supreme Court's previous decisions, it is clear that Part I has been impliedly excluded by the parties as the place of arbitration is outside India. The proper law governing the main contract is defined as English law, which choice shall also extend to the arbitration agreement as its governing law and therefore the challenge to award, if any has to be under English law in English courts and not in Indian courts. The Supreme Court concluded that same and stated that since the choice made by the parties in terms of location of the arbitration is outside India, it would be governed by English law. The Supreme Court went a step further and held that even the seat of arbitration in the instant case would be at London and therefore, Part I has been "expressly" excluded by the parties.

8.5 The question again arose in a recent case of Imax Corporation v. M/s. E-City Entertainment (I) Pvt. Ltd[lxv] ("Imax case"). In the Imax case, Imax Corporation, a company incorporated under the laws of Canada objected to the jurisdiction of Indian courts under Section 34 of the 1996 Act which falls within the Part I of the 1996 Act and gives Indian courts jurisdiction to set aside an arbitral award. The arbitration clause in the said case is reproduced herein below:

"This Agreement shall be governed by and construed according to the laws of Singapore, and the parties attorn to the jurisdiction of the courts of Singapore. Any dispute arising out of this master agreement or concerning the rights, duties or liabilities of E-City or Imax hereunder shall be finally settled by arbitration pursuant to the ICC Rules of Arbitration."

8.6 Let us test the variables in the arbitration clause in the Imax case.

CASE

PROPER LAW OF THE MAIN CONTRACT/ SUBSTANTIVE LAW

PROPER LAW OF THE ARBITRATION AGREEMENT

CURIAL/ PROCEDURAL LAW OF THE ARBITRATION AGREEMENT

SEAT

PLACE/ VENUE

EXCLUSIVE JURISDICTION

APPLICABLITY OF PART I

Imax Case

Singapore Law

None

ICC Rules

London[lxvi]

None

None

Not Applicable

8.7 The Bombay High Court while deciding the matter, based on the law as then existed, inter alia observed that Part I of the 1996 Act would apply because of the following reasons:

a. the subject agreement was signed in India

b. the projects/machinery/services were required to be provided in India subject to approval/sanction of Indian laws

c. ICC rules does not bar the applicability of Part I of the 1996 Act

d. venue itself is not decisive factor to exclude Part-I of the 1996 Act

8.8 In view of the above, the Bombay High Court invoked the doctrine of close nexus for interpreting the scope of dispute resolution clause. It further observed that the agreement is vague and therefore, the surrounding circumstances must be examined. . The court held that merely agreeing to Singapore law as the law governing the contract/ proper law of the contract, will not suffice to oust the jurisdiction of Indian courts and since, the contract is more closely related to Indian law,  Indian law would govern parties and Part I of the 1996 Act would be applicable.

8.9. Proceedings before the Supreme Court

The only question that arose before the Supreme Court was whether the petition under Section 34 of the Arbitration Act is maintainable before a court in India, and in this case, the Bombay High Court.

The Supreme Court relied on the judgment of NTPC[lxvii] and Sukuma Exports[lxviii], wherein the Supreme Court had held that in absence of the intention to the contrary, the law governing the main contract i.e. proper law should extend to the arbitration agreement as well. The Supreme Court further also observed that in the instant case the parties consented for the seat to be at London. The Supreme Court observed that the decision of ICC to hold arbitration outside India is enough to infer that the parties chose to exclude Part I of the 1996 Act. The Supreme Court, accepting the territorial principle, held that the place of arbitration determines the law that will apply to the arbitration and related matters like challenges to the award etc. The Supreme Court further upheld the proposition that law of the seat would be crucial factor in determining the law applicable to the arbitration agreement and has further emphasised on venue of arbitration being outside India i.e. London to be a circumstance to show non-applicability of Part I of the Act.

9. Conclusion

While the judgements of Indian courts in post Balco and post amendments to the 1996 Act are clearly pro-arbitration, the Indian courts have done a commendable job by keeping the spirit of arbitration law alive, respecting party autonomy  and minimising court's interference in cases where the arbitration agreement are signed prior to the Balco Judgment since such cases still attract the ratio of Venture Global and Bhatia International, possibly making Part I applicable to international commercial arbitrations.

The above analysis of the decisions of Indian Supreme Court clearly indicates its views on various permutation and combinations possible of the different variables contained in an arbitration agreement. Foreign companies entering into commercial transactions with an Indian company can expect a 'pro-arbitration' approach by courts in India. The uncertainty with respect to the role of national courts and at times undue interference with the arbitration process has been minimised through the recent amendments to the 1996 Act and various judicial precedents relating to applicability of Part I to international arbitrations agreements. Applicability of Part I of the 1996 Act will depend on the facts and circumstances of each case. For instance, in the Imax Case, parties consented to the seat of arbitration being at London. Likewise, determination of seat is a material circumstance to rule on the applicability of Part I as was done in the case of Reliance Industries where the seat was held to be at London by the tribunal. Similarly, in the cases of Harmony and Eitzen, the court ruled the seat of arbitrations at London and therefore Part I was held inapplicable On the contrary, in the case of Enercon, seat was held to be in India and therefore Part I was held to be applicable  

Another recent example of not interfering with award passed in an international arbitration even when Part I is attracted is the judgement of the Delhi High Court in Shaki Nath & Ors. v. Alpha Tiger Cyprus Investment No.3 Ltd & Ors.[lxix]. In the Alpha Tiger judgement, the Delhi High Court has refused to interfere with the award and negated objections with respect to the qualification of the arbitrator as being raised belatedly. The Court also held that the Tribunal was justified in awarding damages in favour of the investor and the same does not amount to exercise of 'put option' (which is not allowed as per the Indian foreign exchange laws). Shakti Nath has filed an appeal before the Division Bench of Delhi High Court, wherein arguments have been heard and judgement is reserved.[lxx]The above analysis may benefit those parties who have a pre-Balco arbitration agreement to make a judgement as to the applicability of Part I of the 1996 Act to the facts specific to their case. That apart, the above analysis clearly brings out a pro arbitration attitude of the Indian courts as well as the Legislature. The foreign investors entering into contract with Indian parties can confidently incorporate arbitration as the mode of dispute resolution and be reasonably assured that Indian courts will support the arbitral process by respecting party autonomy and keeping the intervention at the minimum threshold.


Footnotes

[1] Author is a Senior Associate with Khaitan & Co, New Delhi India and can be reached at anchitnliu@gmail.com. The views expressed in the present article are author's  personal views and does not necessarily reflect view/ position of Khaitan & Co.


[i] See Section 2(e) of the 1996 Act

[ii] See Section 2 (2) of the 1996 Act;

[iii] See Section 8 of the 1996 Act

[iv] See Supra

[v] See Section 9 of the 1996 Act

[vi] See Section 11(13) of the 1996 Act; 60 days

[vii] See Section 11 (14) of the 1996 Act

[viii] See Section  17(2) of the 1996 Act

[ix] See Section 29A of the 1996 Act

[x] See Section 29B of the 1996 Act

[xi] See Section 36(2) of the 1996 Act

[xii] Section 48

....

"Explanation 1.—For the avoidance of any doubt, it is clarified that an award is in conflict with the public policy of India, only if,—

(i) the making of the award was induced or affected by fraud or corruption

or was in violation of section 75 or section 81; or

(ii) it is in contravention with the fundamental policy of Indian law; or

(iii) it is in conflict with the most basic notions of morality or justice.

Explanation 2. —For the avoidance of doubt, the test as to whether there is a contravention with the fundamental policy of Indian law shall not entail a review on the merits of the dispute.".

[xiii] Pl see Enercon (India) Ltd. v. Enercon Gmbh, (2014) 5 SCC 1; Chloro Controls India (P) Ltd. v. Severn Trent Water Purification Inc., (2013) 1 SCC 641; Mcdonald's India Private Limited v.  Vikram Bakshi and Ors, 2016 SCC OnLine Del 3949 – the Delhi High Court observed as

"63. Courts need to remind themselves that the trend is to minimize interference with arbitration process as that is the forum of choice. That is also the policy discernible from the 1996 Act. Courts must be extremely circumspect and, indeed, reluctant to thwart arbitration proceedings. Thus, while courts in India may have the power to injunct arbitration proceedings, they must exercise that power rarely and only on principles analogous to those found in sections 8 and 45, as the case may be, of the 1996 Act. We have already indicated that the circumstances of invalidity of the arbitration agreement or it being inoperative or incapable of being performed do not exist in this case."

[xiv] 2017 SCC OnLine Del 7810

[xv] O.M.P.(EFA)(COMM.) 7/2016

[xviii] 2017 SCC OnLine Bom 426

[xix] (2006) 11 SCC 181

[xx] MANU/KE/0329/2017

[xxi] Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc., (2012) 9 SCC 552

[xxiii] (1992) 3 SCC 551

[xxiv] (1998) 1SCC 30

[xxv] (2002) 4 SCC 105

[xxvi] (2003) 9 SCC 79

[xxvii] Please see Para 5 of the Judgement

[xxviii] (2007) 5 SCC 692

[xxix] 2008) 4 SCC 190

[xxx] Please see Para 37 of the Judgement

[xxxi] (2008) 10 SCC 308

[xxxii] (2009) 7 SCC 220

[xxxiii] (2011) 6 SCC 161

[xxxiv] (2011) 6 SCC 179

[xxxv] (2011) 9 SCC 735

[xxxvi] (2012) 9 SCC 552 – this column has been added after the publication of preceding update available on http://www.internationallawoffice.com/newsletters/detail.aspx?r=31489

[xxxvii] (2014) 7 SCC 603

[xxxviii] (2014) SCC Online SC 269

[xxxix] Sakuma Exports Limited v.  Louis Dreyfus Commodities and Uisse S.A. 2013 (6) ABR 707

[xl] (2014) 5 SCC 1

[xli] (2015) 9 SCC 172

[xlii] (2016) 11 SCC 508; added in this Chapter

[xliii] (1992) 3 SCC 551

[xliv]  The Court held the proper law of the arbitration agreement to be Indian law.

[xlv] (1998) 1SCC 30

[xlvi] (2002) 4 SCC 105

[xlvii] (2003) 9 SCC 79

[xlviii] "a presumption may arise that the law of the country where the arbitration is agreed to be held is the proper law of the arbitration agreement"

[xlix] (2007) 5 SCC 692

[l] (2008) 4 SCC 190

[li] (2008) 10 SCC 308

[lii] (2009) 7 SCC 220

[liii] (2011) 6 SCC 161

[liv] (2011) 6 SCC 179

[lv] (2011) 9 SCC 735

[lvi] (2014) 7 SCC 603

[lvii] Arbitral Tribunal vide a partial award decided seat as London

[lviii] (2015) 5 SCC 656

[lix] (2014) 5 SCC 1

[lx] Seat was held to be in India by the Bombay High Court and upheld by the Supreme Court stating as under:

135. 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 Doune [Braes of Doune Wind Farm (Scotland) Ltd. v. Alfred McAlpine Business Services Ltd., [2008] Bus LR D 137 (QBD) : 2008 EWHC 426 (TCC)] . Therefore, in the present case, the seat would remain in India." (Emphasis Added)

[lxi] (2015) 9 SCC 172

[lxii] Seat held to be at London (See Para 46 of the Judgment)

[lxiii] (2016) 11 SCC 508

[lxiv] Held to be London, see paragraphs 26 and 27 of the Judgment

[lxv] 2017 SCC OnLine SC 239

[lxvi] Chosen by ICC as the seat of arbitration by consent of both the parties; see para 7 of the Imax Case.

[lxvii] See Supra 35

[lxviii]  See Supra 50

[lxix] 2017 SCC OnLine Del 6894

[lxx] Judgement reserved on 26 April, 2017 in FAO(OS) (COMM) 53/2017.

The content of this document do not necessarily reflect the views/position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at legalalerts@khaitanco.com

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If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.