1. Delhi High Court: Mere fixation of the place or the seat of arbitration outside India, will not divest the Court of its jurisdiction under Section 9 of the Arbitration and Conciliation Act, unless there is any agreement to the contrary

The Hon'ble High Court of Delhi ("DHC") has in its judgement dated October 23, 2020, in the matter of Big Charter Private Limited v. Ezen Aviation Pty. Ltd. and Others [O.M.P. (I) (COMM.) 112/2020] ("Judgement"), held that an agreement would be required to have a specific stipulation that the parties had agreed to exclude the applicability of Section 9 of the Arbitration and Conciliation Act, 1996 ("Act") to the contract between them, and to disputes arising thereunder, and merely fixing a place of arbitration would not oust the Section 9 jurisdiction of the court in case of international commercial arbitration.


Big Charter Private Limited ("Petitioner") provides scheduled air operator services under the name "Flybig". The respondent is a private limited company registered in Australia and is engaged in the business and lease of aircrafts and other associated activities ("Respondent"). The subject matter of the dispute was an aircraft owned by the Respondent ("Aircraft").

The Petitioner proposed to lease the Aircraft from the Respondent. Prior to issuing the Letter of Intent ("LOI"), the Respondent wrote to the Petitioner, acknowledging the desire of the Petitioner to lease the Aircraft with effect from October 1, 2019, for a period of 3 years. Lease rent was fixed at INR 37 lakhs per month plus 5% GST, for the first 18 months, and INR 40 lakhs per month plus 5% GST, for the remaining 18 months, with an additional payment of maintenance reserves to the Respondent at USD 400 (per flying cycle/ flying hour). The Petitioner covenanted to ensure that the Aircraft was registered with the Directorate General of Civil Aviation ("DGCA"). The term of lease was to commence with the delivery of the Aircraft and continue for 36 months. Additionally, the LOI set out various provisions pertaining to payment of lease rent, deposits to be made by the Petitioner and that the final lease agreement would supersede the LOI. The LOI, under its governing law clause, stated that "This Proposal and the underlying documents for the contemplated transaction shall be governed by the laws of India without regard to conflict of laws principles. Lessee and Lessor agree to submit to the exclusive jurisdiction of the courts located in Singapore with regard to any claim of matter arising under or in connection with this Proposal or the Lease Documentation...". Subsequently, a lease deed was executed on November 12, 2019 ("First Lease Deed") between the parties, which was superseded by a second lease deed dated December 9, 2019 ("Lease Deed"). Among other things, the LOI and subsequently the First Lease Deed and the Lease Deed set out schedules of payment of lease rent and deposits to be made by the Petitioner in tranches and format of the delivery acceptance certificate ("DAC") to be executed for acceptance of the Aircraft ("Schedules"). On March 4, 2020, the Petitioner wrote to the Respondent, requiring for confirmation of the final date by which the Aircraft would be delivered. The Respondent alleged delay in delivery due to the delay caused by the Petitioner in painting and design, which the Petitioner argued was the Respondent's duty. The request for handing over of the Aircraft, with all necessary documents, was reiterated, emphasising that Cockpit Door Surveillance System ("CDSS") was required to be installed in the Aircraft, and that the Respondent was also required to provide necessary support towards acquiring of the Certificate of Registration ("COR") and Certificate of Airworthiness ("COA") from the DGCA. The Petitioner stated that if the DGCA were to reject the request for issuance of COA, the Respondent would be required to return to the Petitioner, all amounts paid by it, along with the cost for ferrying the Aircraft. Subsequently, on March 22, 2020, the Petitioner pointed out that during oral discussions, the Respondent had made it clear that it had no intention to deliver the Aircraft to the Petitioner. In the circumstances, the Petitioner called on the Respondent to refund to the Petitioner, an amount of USD 5,30,000, stated to be due from the Respondent. The communication by the Respondent to the Petitioner alleged delay due to the Petitioner, and default in payment of security deposit and advance lease rent, as per the terms of the Lease Deed. It was further alleged that the Petitioner had unilaterally terminated the Lease Deed, thereby obviating the necessity of any termination notice having to be issued by the Respondent. In these circumstances, it was alleged that the Petitioner was liable to pay INR 19,20,460/– to the Respondent. The Petitioner alleged that the Respondent had failed to perform its obligations under the Lease Deed, which included delivery of the Aircraft with a valid COA and reiterated the demand for a refund. Asserting the existence of a clear and undeniable breach by the Respondent of the Lease Deed, the Petitioner moved the DHC under Section 9 of the Act. The Petitioner prayed for:

  • a restraint against the Respondent creating any third party interest/right/title on the Aircraft, or from selling, transferring or encumbering the Aircraft in any manner;
  • a restraint against the Respondent from taking the Aircraft out of India; and " a direction to the Respondent to deposit USD 5,30,000 (equivalent to INR 4,01,05,736/–) in an escrow account.


Whether the DHC has territorial jurisdiction to pass interim relief under Section 9 of the Act when the place of arbitration has been agreed upon as Singapore.


Contentions raised by the Petitioner:

The Petitioner argued that the Aircraft was located at Hyderabad. It was required to be registered with the DGCA and operated in accordance with the Aircraft Act, 1934, Aircraft Rules, 1937 and the civil aviation requirements issued by the DGCA. The most efficacious remedy available to the Petitioner was, therefore, by means of recourse to the jurisdiction of the DHC under Section 9 of the Act. Meaningful provisional relief, such as attachment of the defendant's properties, could be granted only by the court within whose territorial jurisdiction the properties were located, and not by a foreign court having jurisdiction over the situs of the arbitral proceedings. Articles 9 and 17J of the UNCITRAL Model also vested jurisdiction in courts outside the seat of arbitration to grant interim relief. Though the exclusive jurisdiction vested with courts at Singapore, it was only with respect to the application of the governing law and adjudication of disputes pertaining to substantive rights and obligations of the parties but not to grant of interim relief even before the constitution of the arbitral tribunal. The jurisdiction of the court was to be determined as per the curial law governing the conduct of the arbitral proceedings, that is, the Singapore International Arbitration Centre ("SIAC") Rules, which permitted parties to approach any judicial authority for interim relief, before the constitution of the arbitral tribunal, and not merely judicial authorities located in Singapore. The courts in Singapore exercised the jurisdiction to secure assets located abroad only if they had in personam jurisdiction over the parties, that is, where the parties had presented themselves before the courts in Singapore. It was also argued that Section 12A of the International Arbitration Act ("IAA") did not apply at the pre-arbitration stage.

The Petitioner argued that the Aircraft has not been delivered by the Respondent in accordance with the Lease Deed. Execution of the DAC, in the manner provided in the Schedules, was conditional on delivery of the Aircraft in accordance with the covenants of the Lease Deed. In the absence of the certificate of deregistration, certifying that the Aircraft was no longer registered with any foreign authority, there was no "delivery" of the Aircraft within the meaning of the Lease Deed. Hence, the Petitioner did not execute any DAC, certifying delivery of the Aircraft, either. By not delivering the Aircraft with all requisite documents, the Respondent breached the Lease Deed. Without delivery of the Aircraft in accordance with the covenants of the Lease Deed, no liability to pay rent could be fastened on the Petitioner. Petitioner submitted that the plea of "unilateral termination" of the Lease Deed was a smokescreen created by the Respondent to wriggle out of its obligations under the Lease Deed. The maintenance reserves need not be paid if the Aircraft was not flown, since it was not delivered. Since the Respondent is located outside India, permitting the Respondent to alienate the corpus of the arbitral proceeding, that is, the Aircraft, would render the arbitral proceedings futile. The balance of convenience would be in favour of grant of interim reliefs, as sought in the petition.

Between The Lines... December 2020

© 2020, Vaish Associates Advocates,
All rights reserved
Advocates, 1st & 11th Floors, Mohan Dev Building 13, Tolstoy Marg New Delhi-110001 (India).

The content of this article is intended to provide a general guide to the subject matter. Specialist professional advice should be sought about your specific circumstances. The views expressed in this article are solely of the authors of this article.