APPOINTMENT OF SOLE ARBITRATOR

INTRODUCTION

The case (Perkins Eastman Architects DPC & Anr. v. HSCC (India) Ltd.) revolves around the appointment of arbitrator under section 11(6) read with section 11(12)a of the Arbitration and Conciliation Act in accordance with clause of the Contract entered into between the parties and the sole arbitrator so appointed may adjudicate the disputes and differences between the parties arising from the contract.

FACTS OF THE CASE

The respondent was desirous of comprehensive architectural planning and designing. Therefore, a request for a proposal for appointment of Design Consultant was proposed for All India Institute of Medical Sciences, Andhra Pradesh.

Perkins Eastman Architects DPC, an Architectural firm submitted their bid. Letter of Intent was issued in favour of the firm and a contract was entered into between the parties.

As per the arbitration clause, in case of any disputes the Design Consultant shall request (Chief General Manager) CGM, HSCC in writing for written instruction or decision. If the Design Consultant(s) is dissatisfied with the instructions or decision of the CGM, HSCC, the Design Consultants(s) may appeal to the Director (Engg.) HSCC and if the Design Consultant is still dissatisfied with the decision he shall give notice to the CMD, HSCC for the appointment of sole arbitrator.

In this case within six days of the signing of the said contract the respondent alleged failure on part of the Applicants which was followed by stop work notice i.e. the respondents were deliberately trying to stall the project and were non-co-operative right from the initial stages.

Later, a termination notice was issued by the respondent alleging non-compliance of contractual obligations on the part of the applicants and termination letter was issued.  Notice was issued invoking the dispute resolution clause.

An appeal was filed by the Applicants before the Director (Engineering) but there was complete failure on his part to discharge the obligations. Therefore, by letter, the Chief Managing Director was requested to appoint the sole arbitrator and thus a letter was addressed by Chief General Manager of the respondent purportedly appointing the sole arbitrator.

Issues before the court

1.Whether the arbitration in the present case would be an International Commercial Arbitration?

2.Whether a case is made out for exercise of power by the Court to make an appointment of an arbitrator?

ARGUMENTS OF THE PETITIONER:-

It was argued that the appointment process contemplated in the contract gave complete discretion to the Chairman and Managing Director(CMD) of the respondent to make an appointment of an arbitrator of his choice and as such, it would be desirable that the Court makes an appropriate appointment of an arbitrator.

The applicant submitted:-

(a) The applicants had duly invoked the arbitration clause;

(b) The Chairman and Managing Director was the competent authority to appoint  sole arbitrator;

(c) But the Chief General Manager of the respondent wrongfully appointed the sole arbitrator;

(d) Such appointment was beyond the period prescribed;

(e) In any case, an independent and impartial arbitrator is required to be appointed.

ARGUMENTS OF THE RESPONDENT:-

Respondent submitted that no case was made out to maintain the instant application. He submitted that two basic submissions were that the Chairman and Managing Director failed to appoint sole arbitrator within 30 days of the requisition and that it was the Chief General Manager of the respondent who purportedly made the appointment of  sole arbitrator. The infirmities thus projected were on two counts, namely, for over-stepping the limit of 30 days; and secondly the appointment was not made by the Chairman and Managing Director of the respondent. He pointed out that the period in terms of requisition dated 28.06.2019 expired on Friday and the appointment was made on the first available working day. Secondly, the appointment was actually made by the Chairman and Managing Director but was conveyed by the Chief General Manager, and as such the alleged infirmities were completely non-existent.

JUDGEMENT

In the present case, Clause 24 empowers the Chairman and Managing Director of the respondent to make the appointment of a sole arbitrator and said clause also stipulates that no person other than a person appointed by such Chairman and Managing Director of the respondent would act as an arbitrator.

The inference is based on the judgement of TRF Limited v. Energo Engineering Projects Limited[1]. It was held that there are two categories of cases. The first, similar to the one dealt with in TRF Limited where the Managing Director himself is named as an arbitrator with an additional power to appoint any other person as an arbitrator. In the second category, the Managing Director is not to act as an arbitrator himself  but is required to appoint any other person of his choice or discretion as an arbitrator. If, in the first category of cases, the Managing Director was found incompetent, it was because of the interest that he would be said to be having in the outcome or result of the dispute. The element of invalidity would thus be directly relatable to and arise from the interest that he would be having in such outcome or decision. If that be the test, similar invalidity would always arise and spring even in the second category of cases. If the interest that he has in the outcome of the dispute, is taken to be the basis for the possibility of bias, it will always be present irrespective of whether the matter stands under the first or second category of cases.

According to section 11(6) of the Arbitration and Conciliation Act 1996 where, under an appointment procedure agreed upon by the parties,— (a) a party fails to act as required under that procedure; or (b) the parties, or the two appointed arbitrators, fail to reach an agreement expected of them under that procedure; or (c) a person, including an institution, fails to perform any function entrusted to him or it under that procedure, a party may request  [the Supreme Court or, as the case may be, the High Court or any person or institution designated by such Court] to take the necessary measure, unless the agreement on the appointment procedure provides other means for securing the appointment.

So, if there are justifiable doubts as to the independence and impartiality of the person nominated, and if other circumstances warrant appointment of an independent arbitrator by ignoring the procedure prescribed, such appointment can be made by the Court. The application was allowed and an arbitrator was appointed to decide all the disputes arising out of the agreement.

CONCLUSION

The Supreme Court by allowing the application has made it very clear that if the arbitration clause in a contract mentions the procedure as to the appointment of an arbitrator in case a dispute arises between the parties to a contract, then the same must be given effect to. The court has authority to annul the application of the respondent and appoint the arbitrator according to the procedure laid in section 11 of the Arbitration and Conciliation Act.

Disclaimer:

The information contained in this document is intended for informational purposes only and does not constitute legal opinion, advice or any advertisement. This document is not intended to address the circumstances of any particular individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a particular situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.

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

[1] (2017) 8 SCC 377

DECODING THE INTERPLAY BETWEEN ‘SEAT OF ARBITRATION’ AND ‘VENUE OF ARBITRATION’ VIS – A -VIS‘TERRITORIAL JURISDICTION OF PRINCIPAL CIVIL COURT’

The legal quandary between the ‘seat of arbitration’ and ‘venue of arbitration’ vis-a-vis territorial jurisdiction of a ‘Principal Civil Court’ to entertain a petition challenging an award under Section 34[i] has been succinctly elucidated in the recent judgement delivered by the Hon’ble Punjab and Haryana High Court in the case of Adie Browson Breweries Pvt. Ltd. Vs KLA Constructions Technologies Private Limited[ii]whereby, the Hon’ble High Court has rightly inferred that ‘Venue of Arbitration’ does not imply ‘Seat of Arbitration’, in absentia of any express or implied consent of the parties to the agreement and the arbitral award challenged under Section 34[iii] very well falls within the contours of the ‘Principal Civil Court’ to which the exclusive territorial jurisdiction has been expressly conferred to by the parties to the contract.

RELEVANT PROVISIONS OF THE ACT[iv]

Before delving into the brief facts of the case it is imperative to read out the relevant provisions of the Arbitration and Conciliation Act, 1996, inter alia, the basis of the decision arrived at by Hon’ble Justice Deepak Sibal, which is the interplay of Section 34, Section 20, Section 2(1)(e), and Section 31(4) of the Act[v].

BRIEF FACTS OF THE CASE

In the instant Civil Revision petition[vi], the petitioner namely, Adie Browson Breweries Pvt. Ltd. intended to set up a brewery in District Gurdaspur, Punjab and thereafter, entered into an agreement with the respondent namely, KLA Construction Technologies Pvt. Ltd., clearly stipulating the terms and conditions of the execution of work pertaining to construction of the brewery. The dispute arose between the parties qua payments to be made for the execution of the work and the respondent being the aggrieved party, invoked the arbitration clause thereby an arbitral award was rendered by the arbitrator in favour of the respondent to which the petitioner filed an objection petition in the trial court at Gurdaspur and the same was dismissed by the trial court, placing reliance on the law laid down in the Indus Mobile case[vii]on the ground that since the ‘seat for the arbitral tribunal’ was not agreed by the parties either through implied or written consent therefore, the ‘Venue’ wherein all the arbitration proceedings took place would be taken as its ‘Seat’, which in the present case is Delhi. The same has been challenged in the instant revision petition which has been duly allowed by the Hon’bleHigh Court.

LEGAL POSITION

It was canvassed by the counsel for the petitioner that the ‘seat’ for Arbitration was not agreed upon by the parties (either explicitly or by implied consent) and the arbitral award rendered by the Arbitrator has no mention of ‘Seat’ for Arbitration as enshrined under Section 31 of the Act.[viii]Simply because the arbitration proceedings took place in Delhi and Delhi courts can entertain the challenge to an arbitral award under Section 34[ix] would not tantamount to ousting the jurisdiction of the District Court, Gurdaspur, as the work was duly executed in Gurdaspur. Moreover, the‘jurisdiction clause’ in the agreement entered into between the parties explicitly states that in event of any dispute arising between them, the same would be subject to the jurisdiction of the courts in Gurdaspur only. Therefore even the courts in Gurdaspur can entertain the objection petition other than Delhi.

The counter-argument advanced by the respondent to the same was that the petitioner had submitted to the ‘place of arbitration’ by not objecting to the notice wherein the place of arbitration proceedings was mentioned and also such inference is made out by the conduct of the aggrieved party by participating in the above-said proceedings in Delhi thereby implying that ‘seat of arbitration’ is Delhi and thus the ‘place of arbitration’ has rightly been ‘determined’.

Both the counsel relied on a catena of judgements to substantiate their claims which have been referred to by the hon’ble High Court while rendering the judgement.

The Hon’ble High Court placed reliance on Bharat Aluminium Company Ltd. v. Kaiser Aluminium Technical Services, Inc.[x]wherein the Apex Court redefined the scope of Section 2(1)(e)[xi] in lieu of arbitration proceedings being carried out in one place and enabling two courts to have ‘supervisory control’ over the said arbitration proceedings .i.e

1. One, where ‘Cause of Action’ has taken place and;

2.The other, where ‘arbitration proceedings’ are being conducted;

And the same has to be read in consonance with Section 20(3)[xii]which gives recognition to the ‘party autonomy’ while fixing the ‘venue for arbitration proceedings.’ Thus the Apex Court aptly distinguished the term ‘subject matter of the arbitration proceedings’ from ‘subject matter of the suit’. Furthermore, the Apex Court while reinterpreting the provisions of Section 20[xiii]and Section 2(2)[xiv]went on to expound the contours of the ‘place of arbitration’ stating that a threshold limitation is placed on the applicability of Part 1[xv], where the place of arbitration is in India.

Furthermore, the High Court is of the view that Indus Mobile’s case[xvi] does not hold good in the instant revision petition, wherein the ‘seat of arbitration’ and the exclusive ‘jurisdiction clause’ in the agreement entered into between the parties, have already been ‘determined’ and agreed to by the parties, thereby rightly ousting the jurisdiction of the Delhi court, wherein, the whole arbitral proceedings had taken place.

Another striking observation was made by the Hon’ble High court while referring to the EmkayGlobal’scase[xvii], relied upon by the petitioner that the parties to the dispute were ad idem to the exclusive jurisdiction of the courts and the manifestation of the same could be found in the agreement entered into by the parties to the dispute.

Furthermore, in  Hardy’s case[xviii], the Apex Court expounded the provisions of Section 20[xix] and Section 31[xx]on the lines of UNCITRAL Model Law wherein the ‘determination’ of ‘place of Arbitration’ has been elucidated in context to powers of Arbitral Tribunal to ‘determine’ the ‘venue of arbitration’ if the same has not been ‘determined’ by the parties to the agreement. The word ‘place’ would be granted a status of ‘seat’ only if conditions precedents; if any, are fulfilled.

According to the High Court in Ashiana Infrahomes Pvt. Ltd. And others vs. Adani Power Ltd.[xxi],being relied upon by the respondent and the parties through their conduct in arbitration proceedings gave their consent which was duly reflected in the orders passed by the court but the same is not true in the instant revision petition as no such order has been passed by the arbitrator. On a similar footing, the High Court rejected the case of Green Builders[xxii]again being relied upon the by the respondent, wherein the issue was in relation to the ‘appointment of arbitrator’ and the stage of ‘determination’ of the seat of arbitration by the arbitrator under Section 20(2) read with Section 31(4) had not yet reached.

The Hon’ble High Court on a bare perusal of the provisions of Section 31(4), Section 20(2) and Section 20(3) of the Act[xxiii], observed that in the absence of any ‘determination’ of the ‘seat of arbitration’ by the parties to the dispute and due to the absence of mentioning of the ‘seat of arbitration’ in the arbitral award and furthermore the ‘jurisdiction clause’ mentioned in the agreement conferring exclusive ‘territorial jurisdiction’ to the courts of Gurdaspur, the arbitration proceedings which took place at Delhi would be considered as a ‘convenient venue for arbitration’ and nothing more. Furthermore, the High Court went on to state that the courts at Delhi would not be conferred with the exclusive jurisdiction to entertain and adjudicate the objection petition.

Henceforth, the Hon’ble High Court opined that Delhi was not the ‘seat of arbitration’ but merely a ‘venue’ wherein the arbitration proceedings shall take place and the courts at Delhi are not conferred with the exclusive jurisdiction but the courts at Gurdaspur also have the jurisdiction to entertain the objection petition by virtue of the ‘jurisdiction clause’ stipulated in the contract.

 

ANALYSIS OF THE JUDGEMENT

The conundrum as to when a ‘Seat of Arbitration’ tantamount to ‘Place of Arbitration’ and what is the implication of an exclusive ‘jurisdictional clause’ in the written agreement against the backdrop of an arbitration proceeding has aptly been settled down by this judgement. The decision rendered by the Hon’ble Punjab and Haryana Court certainly gravitates towards the conclusion that in order to ‘determine ‘the ‘Seat of Arbitration’it has to pass through a litmus test which can be elucidated in the following manner:

1. A conjoint reading of Section 20(1), Section 20(3) and Section 31(4) of the Act[xxiv], is necessary in order to determine the ‘Seat of Arbitration’

2.Merely participating in the arbitration proceedings would not imply that the ‘Venue’ for the arbitration proceedings is equivalent to the ‘Seat of Arbitration.’

The ‘Venue’ where the arbitration proceedings take place is just a ‘Convenient Venue’ to conduct arbitration proceedings and implies nothing else.

3.In the absence of any express or implied conduct by the parties and no such express mention of ‘place of arbitration’ in the agreement entered into between the parties’; no such adverse inference should be drawn by the court.

4.The ‘Arbitral Award’ should expressly mention the ‘Place of Arbitration’ in order to ascertain the same as ‘Seat of Arbitration’

The judgement also sheds light on the ‘Territorial jurisdiction of the Courts’ which forms the fulcrum of the case in hand. In order to ‘determine’ the ‘jurisdiction of the courts’, it needs to be ascertained as to where does the ’cause of action’arise and whether the agreement entered into between the parties has any exclusive jurisdictional clause conferring the same upon any specific court. If the arbitration proceedings take place at one place and the exclusive jurisdiction has been conferred to any other specific court, then both the courts have the jurisdiction to entertain the objection petition under Section 34 of the Act.[xxv]

CONCLUSION

In the light of the above judgement, it can be readily inferred that the words ‘Venue’, ‘Place’, and ‘Seat’ of Arbitration are used interchangeably but in order to ‘determine’ the ‘Seat of Arbitration,’ it has to be construed according to the provisions of the Act[xxvi]in such a manner that the principles of natural justice are not rendered otiose. The ‘territorial jurisdiction of the court’ has to be ascertained bearing in mind the place where arbitration proceedings take place, arbitral award rendered by the arbitrator and the agreement controverting the matter in issue. Understanding the implications of the judgement perhaps the message that gets through is that even in the most mundane of cases, the court has to ensure that unless or until anything specific has been mentioned in the agreement between the parties to dispute, or by the arbitral tribunal or in the arbitral award rendered by the arbitrator, courts should refrain from jumping to a conclusion which might violate the basic tenets of natural justice thereby defeating the basic of purpose of arbitration as a convenient and an efficient way of resolving the disputes amicably. The judgement has certainly been able to unfold the complexities involved in determining the ‘seat of arbitration’ vis- a-vis ‘territorial jurisdiction of the courts’, but there is still much void left in this spectrum which needs to be addressed by the courts.

 

Disclaimer:

The information contained in this document is intended for informational purposes only and does not constitute legal opinion, advice or any advertisement. This document is not intended to address the circumstances of any particular individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a particular situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.

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

[i] Section 34 of the Arbitration and Conciliation Act of 1996

[ii]2019 (6) Arb. LR 340 (P&H)

[iii]ibid

[iv]The Arbitration and Conciliation Act of 1996

[v]ibid

[vi]2019(6) Arb. LR 234 (P&H)

[vii]Indus Mobile Distribution Pvt. Ltd. VsDatawind Innovations Pvt. Ltd. and others, (2017) 7 SCC 678

[viii]The Arbitration and Conciliation Act of 1996

[ix]ibid

[x] (2012) 9 SCC 552

[xi] Section 2(1)(e) of The Arbitration and Conciliation Act of 1996

[xii] Section 20(3) of The Arbitration and Conciliation Act of 1996

[xiii] Section 20 of The Arbitration and Conciliation Act of 1996

[xiv] ibid

[xv] Part 1 of The Arbitration and Conciliation Act of 1996

[xvi] ibid

[xvii]Emkay Global Financial Services Limited vs. GirdharSondhi, 2018(2) Arb. LR1 (SC)

[xviii] Union of India vs. Hardy Exploration and Production (India), 2018(5) Arb. LR 226 (SC)

[xix]ibid

[xx] ibid

[xxi] 2018 SCC OnLine Del 9110

[xxii] 2017 SCC OnLine P&H 4353

[xxiii]ibid

[xxiv] ibid

[xxv] ibid

[xxvi] ibid

THE CURIOUS CASE OF SEAT, VENUE AND PLACE: THE JUDGEMENT IN CASE OF BGS SGS SOMA JV V. NHPC LTD.

 

INTRODUCTION

Last month, on December 10th 2019, a three judge bench of the Hon’ble Supreme Court comprising of Justice R. F. Nariman, Justice Aniruddha Bose and Justice V. Ramasubranium passed a significant judgement in the case of BGS SGS SOMA JV v. NHPC Ltd.[1] establishing interpretation on certain crucial aspects of the arbitral agreement with respect to whether a venue agreed upon for arbitral proceedings would constitute as the seat of arbitration in absence of a specific indication to the contrary and whether an exclusive jurisdiction would be conferred on the same or not.

FACTS OF THE CASE

National Hydroelectric Power Corporation Limited (NHPC) entered into a contract with contractors BGS SGS SOMA JV (Joint Venture) for a hydroelectric power plant on the Subansri River in Assam, touted to be India’s largest. The contract incorporated an arbitration clause which stated that, “arbitration proceedings shall be held at New Delhi/Faridabad.”

Arbitration was initiated when a dispute arose between the parties with the proceedings taking place in New Delhi. Subsequently an award was signed in favour of the Joint Venture. This was followed by NHPC filing an application under Section 34 of the Arbitration and Conciliation Act, 1996 (Arbitration Act), challenging the award. Interestingly, NHPC filed this application at the Faridabad District Court.

The Joint Venture in turn filed an application with the Faridabad District Court under Section 151 read with Order VII Rule 10 of the Civil Procedure Code, 1908.  The rule allows for a plaint to be returned, at any stage of the suit, to the Court in which it should have been instituted, which in this casethe Joint Venture contended should either be the appropriate court in Delhi, as the arbitration proceedings took place there, or before the District Judge at Dhemaji, Assam, as the cause of action arose there.

The application was consequently transferred from Faridabad to New Delhi. This led the NHPC to appeal under Section 37 of the Arbitration Act at Punjab and Haryana High Court. The Hon’ble High Court held that the appeal filed under Section 37 of the Act is maintainable. It stated that Delhi is not the seat, but merely a venue for the proceedings chosen out of convenience and that since the cause of action arose in Faridabad, therefore Faridabad would have jurisdiction over the matter. Aggrieved by the order of Punjab and Haryana High Court, Joint Venture challenged the order by moving the Apex Court.

SUPREME COURT’S JUDGEMENT

The case presented primarily three questions before the Hon’ble Supreme Court. Firstly, whether the appeal made by NHPC under Section 37 of the Act is maintainable or not. Secondly, whether selection of a particular place for arbitration would imply that an exclusive jurisdiction lies with the courts of such place with regard to disputes that may arise out of that arbitration agreement. And thirdly, what would be considered to be the seat of arbitration.

The Court held that an order to transfer proceeding under section 34 of the Act is a transfer order and cannot be appealed under section 37 of the Act. Section 37 of the Act states the following-

“37.  Appealable orders.(1) An appeal shall lie from the following orders (and from no others) to the Court authorised by law to hear appeals from original decrees of the Court passing the older, namely :-

(a)granting or refusing to grant any measure under section 9;

(b)setting aside or refusing to set aside an arbitral award under section 34.

(2)Appeal shall also lie to a court from an order of the arbitral tribunal-

(a) accepting the plea referred to in sub-section (2) or sub-section (3) of section 16; or

(b)granting or refusing to grant an interim measure under section 17.

(3)No second appeal shall lie from an order passed in appeal under this section, but nothing in this section shall affect or take away any right to appeal to the Supreme Court.”

It lays down that an appeal can arise under this section either against orders of court pertaining to interim measures as mentioned in Section 9 of the Act or against orders of court to either set aside or refusal to set aside an arbitral award as may be challenged under Section 34. An appeal can also arise from an order of the arbitral tribunal pertaining to its own jurisdiction as per Section 16 or an order granting or refusing to grant interim orders under Section 17. The Hon’ble Supreme Court was of the view that since the order to return the petition under Section 34, as made by the Special Commercial Court, did not fall under any category as mentioned above, therefore an appeal under Section 37 of the Act is not maintainable in the present matter.

The next question was with respect to what court would have jurisdiction in disputes that may arise from the arbitration agreement. It was the contention of NHPC that concurrent jurisdiction of two courts can exist. The two courts being the court of the seat, that is New Delhi and the one where the cause of action arose, that is Faridabad. They put reliance on paragraph 96 of Bharat Aluminium Co.v. Kaiser Aluminium Technical Service, Inc[2] (BALCO Case). The Hon’ble Court observed that merely relying on a particular paragraph from the BALCO judgement would not suffice as it is not in consonance with the rest of the judgement. The BALCO judgement upholds and places reliance upon the English judgment of Roger Shashoua & Ors. v. Mukesh Sharma[3] (Shashoua Case). The Shashoua judgement held that the seat of arbitration is to have an exclusive jurisdiction over all proceedings that arise out of the arbitration. It states-

“When there is an express designation of the Arbitration Venue as London and no designation of any alternative place as seat, combined with a supranational body of rules [i.e. ICC] governing the Arbitration and no other significant contrary indicia, the inexorable conclusion is, to my mind, that London is the juridical seat and English law the curial law.”

To put it in context, in the Shashoua case, the parties had entered into an arbitration agreement, stating the venue of arbitration to be London, U.K. They had also agreed for the arbitration to be conducted according to the arbitration rules of International Chambers of Commerce. They had chosen Indian law as their substantive law but there was no express choice of seat.Not only has the Shashoua judgement been referred to by the Apex Court in its various judgements such as Enercon (India) Ltd & Ors. v. Enercon GmbH & Anr.[4] (Enercon Case) but the principle laid down has also been relied upon, even in the BALCO judgement.

The Hon’ble Apex Court, relying on the Shashoua principle in the present case, concluded that if a place of arbitration is designated as a venue of the arbitration proceedings, then the venue is the seat of the proceedings. This is because the agreement doesn’t merely talk about one or more hearing but instead the arbitration proceedings as a whole, which would include making of the arbitral award at the place agreed upon.If the parties have agreed upon a venue as a place of convenience where the tribunal is to meet or examine the witness, etc. then such a venue would not equate to being the seat of the arbitral proceedings. The language here demarcates the intention of the parties. Choosing to use “shall be held” at a particular venue would also indicate that the intention of the parties is to root the arbitration to this particular venue, thus making it the seat. In absence of any contrary indication suggesting that the venue is not the seat but a mere location chosen out of convenience, the venue would be taken to be the seat.[5]

In the present case, the Hon’ble Court took into account the fact that the parties had agreed to have the arbitral proceedings take place in New Delhi, including the award being signed there, and concluded that New Delhi is the juridical seat of the arbitration and therefore overruled the impugned order and identified New Delhi to have the jurisdiction to hear the application filed under Section 34 of the Act.

CONCLUSION

The Apex Court through this judgement has clearly elucidated the following-

(1) An appeal against a Transfer Order of proceedings arising out of Section 34 of the Act is not maintainable under Section 37 of the Act.

(2) A place agreed upon by the parties in the agreement as the venue or the seat of the arbitral proceedings, that is where the proceedings are to be held, is to be taken as the juridical seat of arbitration and not just a physical location chosen out of convenience by the parties, unless the parties have mentioned to the contrary in the agreement.

(3) An exclusive jurisdiction is conferred on the juridical seat of arbitration with regard to all the proceedings that arise out of the proceedings.

The judgment has overruled the earlier judgements made in the case of Union of India v. Hardy Exploration and Production (India) Inc.[6] (Hardy Exploration Case) and Antrix Corporation Ltd v. Devas Multimedia Pvt Ltd.[7]  (Antrix Case). The Hon’ble Court has mentioned that the reliance placed on paragraph 96 of the BALCO Case (as discussed above) in the Antirx Case is not good in law. It also describes that interpretation of venuein the Hardy Exploration Case as just a location that the parties has agreed upon for the arbitral proceedings to physically take, unless “concomitant” factors exist to show that the venue is the intended juridical seat is incorrect. They explain that the reasoning in the Hardy Exploration Case fails to take into account the principles expounded in the Shashoua Case and therefore is not legally sound.

While the Hon’ble Court has presented a very well-reasoned clarity to the situation through this judgement, it is important to note that both the present judgement and the Hardy Exploration judgement have been passed by three-judge benches. So it may be an overstatement to say that the decision of Hardy Exploration Case has been overruled, it is yet to be seen if a larger bench will intervene and settle the dichotomy so created.

 
[1] 2019 SCC Online SC 158

[2]((2012) 9 SCC 552

[3][2009] EWHC 957 (Comm.)

[4](2014) 5 SCC 1

[5] Para 84,2019 SCC Online SC 1585

[6]AIR 2018 SC 4871

[7]2018 (4) ArbLR 66 (Delhi)

 

Disclaimer:

The information contained in this document is intended for informational purposes only and does not constitute legal opinion, advice or any advertisement. This document is not intended to address the circumstances of any particular individual or corporate body. Readers should not act on the information provided herein without appropriate professional advice after a thorough examination of the facts and circumstances of a particular situation. There can be no assurance that the judicial/quasi-judicial authorities may not take a position contrary to the views mentioned herein.

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

Enforcement of various provisions of the Arbitration and Conciliation (Amendment) Act, 2019

Posted on 04th September 2019 2:01PM by PIB Delhi

1. The Arbitration and Conciliation (Amendment) Act, 2019 was notified on 9th August, 2019. Sub-Section 2 of Section 1 of the Arbitration and Conciliation (Amendment) Act, 2019 provides as under:-
“(2) Save as otherwise provided in this Act, it shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint and different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.”

2. The Central Government by exercising powers conferred under sub-section 1 of the Arbitration and Conciliation (Amendment) Act, 2019, appoints the 30th August, 2019, for enforcement of the following Sections of the Arbitration and Conciliation (Amendment) Act, 2019:-
(i) Section 1;
(ii) Section 4 to 9 [both inclusive];
(iii) Section 11 to Section 13 [both inclusive];
(iv) Section 15.

3. Necessary Gazette Notification in this regard has been issued by the Central Government. In pursuance of the above notification, the section 17, 23,29A, 34, 37, 45 and 50 of the Arbitration and Conciliation Act, 1996 (the Act) stand amended. Also three new sections namely 42A, 42B, and 87 stand inserted in the Act. The insertion of section 87 is with retrospective effect i.e. 23rd October, 2015, with a view to clarify the applicability of the said cut-off date on arbitration and related court proceedings.