§10(1) of Commercial Courts Act 2015 requires an application or an appeal in an international commercial arbitration to be filed before the Commercial Division of a High Court. The Karnataka High Court has recently held that the challenge to an international commercial arbitration award in a High Court not having ordinary original civil jurisdiction is to be considered by the Commercial Division of that High Court, and has directed that a Commercial Division be setup for this purpose.
Disputes arose between ITI Ltd and Alphion Corporation in relation to a Technology Collaboration Agreement. The dispute was referred to arbitration. The venue and the seat of the arbitration was Bangalore. The award was in favour of Alphion and ITI filed an appeal under §34 of the Act in the Karnataka High Court challenging the award before the Commercial Appellate Division. However, the Court Registry raised an objection on the maintainability of the appeal as a commercial appeal.
The Karnataka High Court admitted the appeal and said:
- As per §2(e)(ii) of the Act, the word "Court" with respect to an international commercial arbitration means the High Court exercising its ordinary original jurisdiction and having the jurisdiction to decide the questions forming the subject-matter of the arbitration, and in other cases a High Court having jurisdiction to hear appeals from subordinate court rulings.
- Since the Karnataka High Court does not have original civil jurisdiction, the latter portion of §2(e)(ii) would be triggered, and the roster Judge of the Karnataka High Court, who has jurisdiction to hear appeals from subordinate Court decrees, is able to consider any aspect of the international commercial arbitration.
- §4 of the Commercial Courts Act 2015 does not bar the establishment of a Commercial Division in a High Court not exercising ordinary original civil jurisdiction and §10(1) mandates an application or an appeal in an international commercial arbitration to be filed before the Commercial Division of the High Court.
- For a High Court not exercising ordinary original civil jurisdiction, a Commercial Division is required to be established for the purposes of considering applications and appeals arising out of international commercial arbitrations. Furthermore, such Commercial Divisions would have to be constituted comprising of single judges so that in the event of a challenge, it could be filed before the Commercial Appellate Division of the High Court as per §37 of the Act.
- Since, the Commercial Divisions were constituted as special divisions, the limitation of the pecuniary jurisdiction for the exercise of powers of the single judge would not apply.
- Reclassification of existing cases in relation to the nature of the proceedings in arbitration – one relating to proceedings under §34 as regards to international arbitration awards and another relating to the orders of the Commercial Divisions challenging orders passed under §9 in relation to international commercial contracts or arbitral proceedings.
- Proceedings in relation to execution of an international commercial arbitral award or interim relief in respect of international commercial arbitration would also have to be dealt with by the Commercial Division comprising of a single judge.
- All pending proceedings which meet the above criteria pending before the Commercial Appellate Division are to be reclassified and transferred to the single judge exercising jurisdiction over the Commercial Division.
A challenge to an international commercial award will lie before a single judge of the Commercial Division of a High Court even though it may not have ordinary original jurisdiction.
* Decision dated 16 February 2022 passed by the Karnataka High Court in Comm App No 32 of 2022.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.