2012 (9) TMI 912 - SUPREME COURT

Arbitration clause - territorial criterion / principle - Scope of Arbitration Act, 1996 - Performance of the agreement - English Arbitration Law was made applicable - Maintainability of appeal against the Foreign Awards - Decision of constitutional bench of Supreme Court - Held that:- 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 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.

With utmost respect, we are unable to agree with the conclusions recorded in the judgments of this Court in Bhatia International [2002 (3) TMI 824 - SUPREME COURT OF INDIA] and Venture Global Engineering [2008 (1) TMI 829 - SUPREME COURT OF INDIA]. 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 maintainable in India, on the basis of an international commercial arbitration with a seat outside India.

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

The judgment in Bhatia International [2002 (3) TMI 824 - SUPREME COURT OF INDIA] 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 [2008 (1) TMI 829 - SUPREME COURT OF INDIA] has been rendered on 10th January, 2008 in terms of the ratio of the decision in Bhatia International [2002 (3) TMI 824 - SUPREME COURT OF INDIA]. 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.