The Court held that a Section 34 petition challenging a Foreign Arbitral Award is not maintainable where the seat of arbitration is London and English law governs, as Part I of the Arbitration Act does not apply per subsequent Supreme Court judgments.
O.P.No.625 of 2015 dismissed on the grounds of lack of jurisdiction.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
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IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 27.09.2016
CORAM:
THE HONOURABLE MR.JUSTICE S.MANIKUMAR
O.P. No.625 of 2015
M/s.Shriram EPC Limited having its Registered office at Sigappi Achi Building, 4th Floor, No.18/3, Rukmini Lakshmipathi Salai Egmore, Chennai - 600 008 .. Petitioner
Vs.
1.M/s.Rioglass Solar SA Poligno Industrial Villallana S/N 33695 Pola de Lena Asturias, SPAIN
2.Abhijeet Projects Limited EN1, Insignia Towers Sector V, Salt Lake Kolkata 700 091
3.Corporate Ispat Alloys Limited EN1, Insignia Towers Sector V, Salt Lake Kolkata 700 091
4.Mr.Christopher Style, QC Arbitral Tribunal International Chamber of Commerce (ICC) 33-143 Avenue du President Wilson 75116 Paris France .. Respondents
Original Petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside the Award dated 12.2.2015 passed by the 4th Respondent and for further orders.
2 For Petitioner : Mr.Vishnu Mohan for M/s.Satish Parasaran For Respondents : Mr.Hiroo Advani
O R D E R
This original petition has been filed by M/s.Shriram EPC Limited, Chennai, with a prayer to set aside the Foreign Award dated 12.2.2015 passed by the 4th respondent, namely Arbitral Tribunal International Chamber of Commerce (ICC), Paris, France.
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under the Indian Companies Act, 1956, is a flagship company of the Abhijeet Group of Companies based in Nagpur. M/s.Corporate Ispat Alloys Limited, Kolkata, the third respondent, is a part of the Abhijeet Group of Companies is undertaking building, owning and operation of a 1 x 50 MW Solar Thermal Power Plant at Village Nokh, District Jaisalmer in Rajasthan (hereinafter referred to as the 'Project/Facility'). In the matter of disputes between M/s.Shriram EPC Limited, Chennai and (1) M/s.Rioglass Solar SA, (2) M/s.Abhijeet Projects Limited, and (3) M/s.Corporate Style QC, the Arbitral Tribunal is having office at International Chamber of Commerce (ICC), 33-43 Avenue du President Wilson, 75116 Paris, France. As per the Arbitral Award dated 12.2.2015 under the ICC International Court of Arbitration Foreign Award Case No.19467/TO, the petitioner is liable to pay to the respondents, the following,
i. € 4,366,598.7 consisting of damages amounting to € 4,151,571.52 and interest amounting to € 215,028.18;
ii. € 363,175.32 in respect of legal and other costs of the arbitration.
iii. USD 87000 in respect of the fees and expenses of the Arbitral Tribunal and the administrative expenses of the ICC; and
iv. simple interest @ 3.5% per annum on the amounts outstanding under the award from the date of the award until payment.
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Heard the parties and perused the materials available on record.
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1996, falling under Part I of the Arbitration and Conciliation Act, 1996, is not maintainable. According to the respondent, in terms of the arbitration agreement, the arbitration has taken place in London from 14.5.2013, being the request for arbitration, the parties have filed their pleadings and a final award has been passed on 12.2.2015. Learned counsel for the first respondent has also submitted that a petition under Section 47 of the Arbitration and Conciliation Act, 1996 in O.P.No.587/2015 has been filed by the first respondent for enforcement of the foreign award. Learned counsel for the first respondent has further contended that since the award has not been challenged in the appropriate forum (London under the English law), under the governing law, the award dated 12.2.2015 has become final and binding between the parties, in terms of Section 48(1)(e) of the Arbitration and Conciliation Act, 1996.
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has contended that unless and until the arbitration agreement expressly or impliedly, excludes the provision of Part I, the same would be applicable to a International Commercial Arbitration and in support of the same, relied on a Three Judge Bench judgment of the Hon'ble Supreme Court in Bhatia International vs. Bulk Trading S.A. and Another reported in (2002) 4 SCC 105 and at paragraph No.32, held as follows:
"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."
9. Placing reliance on Venture Global Engineer vs. Satyam
Computer Services Ltd. & Another reported in (2008) 4 SCC
190, and by referring to clause 17 of the Multi-Party Agreement, the petitioner has further contended that there is no express or
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implied exclusion or inapplicability of Part I of the Arbitration and Conciliation Act, 1996 and hence petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 is maintainable and challenged the award on merits also.
" 17.1 This contract shall be governed and interpreted in accordance with the laws of England. Any disputes of differences arising out of, in connection with or in relation to this Contract shall be resolved as follows:
i) In the first instance they shall be attempted to be resolved by amicably negotiations in good faith between the Parties. An attempt at settlement shall be deemed to have failed as soon as one of the parties so notifies the other in which case each party may initiate an arbitration proceeding pursuant to the following section.
ii) All disputes arising out of or in connection with the present Agreement, including any question regarding its existence, validity or termination, shall be finally settled under the Rules of arbitration of the International Chamber of Commerce (ICC) by one or more arbitrators appointed in accordance with the said Rules. The seat of arbitration shall be London, England. The procedural law of this seat applicable to international arbitration proceedings shall apply where the Rules are silent. The language
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to be used in the arbitration proceedings shall be English and the arbitration award shall be final and binding on the parties. The procedural law of the place of arbitration shall apply where the Rules are silent."
Court in Bharat Aluminium Co. v. Kaiser Aluminium Technical
Services Inc., reported in (2012) 9 SCC 552 , the Hon'ble Apex Court held as follows:
" 195. With utmost respect, we are unable to agree with the conclusions recorded in the judgments of this Court in Bhatia International (supra) and Venture Global Engineering (supra). In our opinion, the provision contained in Section 2(2) of the Arbitration Act, 1996 is not in conflict with any of the provisions either in Part I or in Part II of the Arbitration Act, 1996. In a foreign seated international commercial arbitration, no application for interim relief would be maintainable under Section 9 or any other provision, as applicability of Part I of the Arbitration Act, 1996 is limited to all arbitrations which take place in India. Similarly, no suit for interim injunction simplicitor would be
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maintainable in India, on the basis of an international commercial arbitration with a seat outside India.
197. The judgment in Bhatia International (supra) was rendered by this Court on 13th March, 2002. Since then, the aforesaid judgment has been followed by all the High Courts as well as by this Court on numerous occasions. In fact, the judgment in Venture Global Engineering (supra) has been rendered on 10th January, 2008 in terms of the ratio of the decision in Bhatia International (supra). Thus, in order to do complete justice, we hereby order, that the law now declared by this Court shall apply prospectively, to all the arbitration agreements executed hereafter."
"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 pre-condition that the Arbitration Act, 1996 is applicable to the arbitration agreement. In our opinion, the High Court has committed a
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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 14th September, 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.
75.In view of the aforesaid, we are unable to uphold the conclusion arrived at by the Delhi High Court that the applicability of Arbitration Act, 1996 to the arbitration agreement in the present case has not been excluded.
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
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would still be applicable as the laws governing the substantive contract are Indian Laws.
Shipping Limited v. Gupta Coal India Limited & Another
reported in (2015) 9 SCC 172, the Hon'ble Apex Court held as follows:
" 45. Coming to the stipulations in the present arbitration clause, it is clear as day that if any dispute or difference would arise under the charter, arbitration in London to apply; that the arbitrators are to be commercial men who are members of London Arbitration Association; the contract is to be construed and governed by English Law; and that the arbitration should be conducted, if the claim is for a lesser sum, in accordance with small claims procedure of the London Maritime Arbitration Association. There is no other provision in the agreement that any other law would govern the arbitration clause.
48. In the present case, the agreement stipulates that the contract is to be governed and construed according to the English law. This occurs in the arbitration clause........
.......... 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.......
51. Having said that the implied exclusion
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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.
42. Before parting with the case, it is obligatory on our part to state that the Division Bench of the High Court has allowed the petition on the foundation that the Bharat Aluminium Co. case would govern the field and, therefore, the court below had no jurisdiction is not correct. But as has been analysed and discussed by us, even applying the principles laid down in Bhatia International (supra) and scanning the anatomy of the arbitration clause, we have arrived at the conclusion that the courts in India will not have jurisdiction as there is implied exclusion.
Thus, it could be seen that when the agreement was post BALCO's case and when the jurisdiction seat is outside India, the law governing the arbitration should be law, other than Indian Law, namely Part I of the Arbitration and Conciliation Act, 1996 and that the same is not applicable to the case on hand.
has been overruled by the Constitutional Bench in BALCO's case. As per the ratio decidendi, when the law governing the agreement to
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arbitrate, the law governing the conduct of arbitration and the law governing the contract, are English Laws, the question of applying Part I of the Arbitration and Conciliation Act, 1996 does not arise.
" 32. We are thus of the view that by Clause 28, the parties chose to exclude the application of Part I to the Arbitration proceedings between them by choosing London as the venue for Arbitration and by making English law applicable to Arbitration, as observed earlier. It is too well settled by now that where the parties choose a juridical seat of Arbitration outside India and provide that the law which governs Arbitration will be a law other than Indian law, part I of the Act would not have any application and, therefore, the award debtor would not be entitled to challenge the award by raising objections under Section 34 before a Court in India. A court in India could not have jurisdiction to entertain such objections under Section 34 in such a case."
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when the seat of arbitration is at London, England. Therefore, the procedural law applicable to the case on hand, is the procedural law of the seat of arbitration, London, England, applicable to international arbitration proceedings.
27.09.2016 Index : Yes/No Internet : Yes/No asr
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S. MANIKUMAR, J.
asr
O.P.No.625 of 2015
27.09.2016
2 issues framed by the court
Whether a petition filed under Section 34 of the Arbitration and Conciliation Act, 1996 to set aside a foreign award is maintainable when the arbitration seat is in London and the governing law is Eng
Whether Part I of the Arbitration and Conciliation Act, 1996 applies to an international commercial arbitration seated outside India.
Colour shows how this judgement treated each authority
Bhatia International vs. Bulk Trading S.A.Distinguished¶35
Bhatia International vs. Bulk Trading S.A. and Another (2002) 4 SCC 105 · Who else cites this
Venture Global Engineer vs. Satyam Computer Services Ltd.Distinguished¶37
Venture Global Engineer vs. Satyam Computer Services Ltd. (2008) 4 SCC 190 · Who else cites this
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc.Overruled¶49
Bharat Aluminium Co. v. Kaiser Aluminium Technical Services Inc. (2012) 9 SCC 552 · Who else cites this
Reliance Industries Limited and Another v. Union of IndiaExplained¶55
Reliance Industries Limited and Another v. Union of India (2014) 7 SCC 603 · Who else cites this
Harmony Innovation Shipping Limited v. Gupta Coal India LimitedExplained¶65
Harmony Innovation Shipping Limited v. Gupta Coal India Limited (2015) 9 SCC 172 · Who else cites this
Eitzen Bulk A/S v. Ahapura Minechem LimitedExplained¶80
Eitzen Bulk A/S v. Ahapura Minechem Limited (2016) SCC Online SC 523 · Who else cites this
1 provisions across 1 enactments
M/s.Shriram EPC Limited
M/s.Rioglass Solar SA
Abhijeet Projects Limited
Corporate Ispat Alloys Limited
Mr.Christopher Style
S. Manikumar
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
