9911796707
TMI Blog2008 (5) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... negotiations, the same shall be referred to Arbitration as per the provisions of the Indian Arbitration Act, 1940 and the rules made thereunder and any statutory modifications or re-enactment thereof that may be made from time to time and actually in force at the time of reference. The cost of arbitration shall be borne by the parties in the ratio to be agreed upon by the parties. The venue of the Arbitration shall be New Delhi. The language to be used in the arbitration proceedings shall be English." 3. Disputes and differences having arisen between the parties, the said arbitration agreement was resorted to, wherefor a notice dated 22-3-2007 was served by the petitioner through its solicitors M/s. Shook Lin & Bok. A nominee was proposed. In response thereto, the respondent herein through its solicitors M/s. Shearn Delamore & Co. also proposed its nominee by a letter dated 18-4-2007. Respondent, however, proposed amendments to the original dispute resolution and arbitration clause by suggesting change of venue of the arbitration to Kuala Lumpur, Malaysia instead and place of New Delhi and that the disputes be arbitrated in terms of the Malaysian Law and the Malaysian Arbitration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... behalf of the respondent, on the other hand, would submit that the interpretative tools for interpretation of the provisions of the 1996 Act and taxing statute are different. It was urged that the jurisdiction of this court must be determined having regard to the provisions contained in sections 2(6), 11(9) and 28 of the 1996 Act. It was furthermore submitted that the English Courts, even in respect of a taxing statute, have deviated from its earlier stand as would appear from a decision in Unit Construction Co. Ltd. v. Bullock [1960] AC 351. 10. The 1996 Act was enacted to consolidate and amend the law relating to domestic arbitration, international commercial arbitration and enforcement of foreign arbitral awards as also to define the law relating to conciliation and for matters connected therewith or incidental thereto. The preamble of the 1996 Act shows that the Parliament of India intended to give effect to the rules framed by the United Nations Commission on International Trade Law (UNCITRAL) known as UNCITRAL Model Law on International Commercial Arbitration in 1985. 11. Before embarking on the questions adverted to heretobefore, we may notice some provisions of the 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... long to different nationalities." Section 28 of the 1996 Act reads as under :- "28. Rules applicable to substance of dispute.-(1) Where the place of arbitration is situate in India,- (a)in an arbitration other than an international commercial arbitration, the arbitral tribunal shall decide the dispute submitted to arbitration in accordance with the substantive law for the time being in force in India; (b)in international commercial arbitration,- (i)the arbitral tribunal shall decide the dispute in accordance with the rules of law designated by the parties as applicable to the substance of the dispute; (ii)any designation by the parties of the law or legal system of a given country shall be construed, unless otherwise expressed, as directly referring to the substantive law of that country and not to its conflict of laws rules; (iii)failing any designation of the law under clause (a) by the parties, the arbitral tribunal shall apply the rules of law it considers to be appropriate given all the circumstances surrounding the dispute. (2) The arbitral tribunal shall decide ex aequo et bono or as amiable compositeur only if the parties have expressly authorised it to do so. (3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. The 1996 Act keeping in view the scheme of the statute must be read in its entirety. It takes into consideration various situations. Power of this Court to appoint an arbitrator would arise in view of sub-section (12) of section 11 of the 1996 Act only if it is to be held that the dispute has arisen in relation to an international commercial arbitration. Whether, thus, an agreement falls within the purview of section 2 (1)( f) of the 1996 Act is the core question. Section 2(1)(f) speaks of legal relationship whether commercial or otherwise under the law in force in India. The relationship has to be between an individual who is a national of or habitually resident in any country other than India as specified in clause (i) of section 2(1)(f). 'Nationality' or being 'habitually resident' in respect of a body corporate in any country other than India should, in my view, receive a similar construction. 15. Determination of nationality of the parties plays a crucial role in the matter of appointment of an arbitrator. A company incorporated in India can only have Indian nationality for the purpose of the Act. It cannot be said that a company incorporated in India does not have an In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Act). The intention of the Legislature appears to be clear that Indian nationals should not be permitted to derogate from Indian law. This is part of the public policy of the country. 21. Russell on Arbitration, 23rd edition, page 357, in his commentary on English Arbitration Act, 1996, shows that although a distinction has been made between a domestic and non-domestic arbitration but the provisions relating to domestic arbitration had not been brought into force. 22. Section 85 of the English Arbitration Act, 1996 which provides for a modification of Part I in relation to domestic arbitration agreement reads, thus :- "85. Modification of Part I in relation to domestic arbitration agreement.-(1) In the case of a domestic arbitration agreement the provisions of Part I are modified in accordance with the following sections. (2) For this purpose a 'domestic arbitration agreement' means an arbitration agreement to which none of the parties is- (a)an individual who is a national of, or habitually resident in, a state other than the United Kingdom, or (b)a body corporate which is incorporated in, or whose central control and management is exercised in, a state other than the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inbefore, would lead to determination of jurisdiction of either the High Court or this Court with certainty. In V.V.R.N.M. Subbayya Chettiar's case (supra), this Court, while dealing with the issue of Hindu Undivided Family and the residence of the family endorsed the definition of Patanjali Sastri, J. (in the same case before the Madras High Court) as follows :- "4. . . . 'Control and management' signifies, in the present context, the controlling and directive power, 'the head and brain' as it is sometimes called, and 'situated' implies the functioning of such power at a particular place with some degree of permanence, while 'wholly' would seem to recognize the possibility of the seat of such power being divided between two distinct and separated places." (p. 102) In that case, this Court, while dealing with the definition contained in section 4 of the Income-tax Act was mainly concerned with a Hindu Undivided Family and not a Company. Furthermore, in the findings of Patanjali Sastri, J., there is a direct reference to 'some degree of permanence'. A difficulty in having a clear definition of domicile has been noticed by this Court (albeit in a different context) in Central Ban ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the articles of association of a limited company vest the control of the company in the board of directors and that accordingly, if you found out that the board of a company habitually met in a particular country, you would thus settle the residence of that company. He plainly had not in mind a case such as the present, where it would appear that the board of directors appointed under the articles did not meet at all during the period relevant to the assessments now in question, nor was he expressing any opinion as to what the right conclusion would be, if, for instance, the control was vested not in the board but in managing agents. It seems to me that, in the circumstances disclosed in the Case Stated, the commissioners, if the Court of Appeal were right as to the law, might, but for the admission made by the appellant company, have been compelled to find that the African subsidiaries had no residence anywhere. Moreover, it may well be asked what the position would have been had the business of each of the African companies been conducted by their duly appointed boards but, in disregard of the articles, all the board meetings had been held in London and all instructions had ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
